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US ECONOMY
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US Economy
Name: Ali Almakrami
US ECONOMY
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The US economy outlook is healthy. The Gross Domestic Product is within the range of
2% to 3%.what is it specifically and what is it forecasted to do and why In this case,
unemployment is expected to continue at the natural rate.which is what According to the Bureau
of Labor Statistics, occupations will experience an increase in growth with the fastest growth
being experienced in the healthcare, construction, and social assistance. Inflation is also
moderate.which is what and why It implies that there is little risk for irrational exuberance that
results in damaging booms and busts (Mitchell, 2016).
In the onset of 2016, there has been an increase in the production of U.S Shale oil.Shale
is having a hard time because of the cheap price of oil. It is a high capital industry and requires
loans and investments and since the price of oil those have diminished. Why will it increase
given this situation It can be considered as good news for the US economy due to the lowering of
the transportation costs as a result of reduced oil prices oil has gone down because there is an
oversupply – we are more efficient in using less but there is a problem with over production by
oil producing nations. These nations are suffering because oil is often their main product. How
does this impact the US. . Also, it is an incentive for the raising profit margins in businesses.
Consumers are left with a higher disposable income to invest and spend However, increased
money due to less spent on oil has not increased spending or profit that much – why????. It is
expected that the Gross Domestic Product will increase by 2.4% in 2016.This is very optimistic
when some economist are suggesting a recession It is after the 2.1 % growth rate in 2015.
According to statistics, it is expected that the US manufacturing industry will grow at a higher
rate than the US general economy in 2016. Therefore, production is expected to grow at a rate of
US ECONOMY
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2.6%. The unemployment rate is expected to be at 4.7% which is a lower rate than that of 2015
which was at 5%. The job growth will be experienced in the low-paying retails and
manufacturing industries.How would you use this if you were a construction manager. Also
what are housing starts doing? What type of housing is being built. Thus, structural employment
will increase. On the inflation rate, it is expected to be 1.6% in 2016. It will thus increase in
comparison to 2015 which was 0.4% (Mitchell, 2016).
The interest rate is also expected to gradually increase in 2016. The Fed funds rate was
raised to 0.5% in December 2015 thus; the anticipated impact. Fed has planned to roll over $4
trillion in Treasuries thus increase the supply. The increase in supply drives up the long-term
interest rates. Nonetheless, there is uncertainty in the global economy which makes the treasury a
strong investment. Therefore, both long-term and fixed interest rates will increase in 2016 and
the coming years (Kocherlakota, 2015). Again convert to how this is going to be used. Does
this now mean that the cost of borrowing will increase???The stock market profitability will
increase due to the stock market correction that is expected to set a new record in 2016. The
stock market is a lagging indicator. However, the stockmarket has been very volatile lately and
this can impact the confidence of businesses and consumers. The housing market will increase
in its growth. It will be due the increase in the home prices and the creeping of interest rates.
Housing market will not increase because of increasing interest rates – it will decrease the
purchasing of homes. Consumers have been of great support the economy with snapping cars,
US ECONOMY
shelling more restaurants, and home purchases. However, the increasing weakness of the global
economy along with the energy sector are hindering the demand in the American industries.
Further discuss
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Price of oil decreasing and will it continue
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More money to spend – but are people spending? Discussed above
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Oil producing companies have been hurt by oil prices and are laying off and
profits low
•
•
Oil producing nations?
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Money invested in sustainable fuels has decreased because oil price low
Consumer
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Spending consumers are spending more but still inflation is low and availability
of money is high. Consumers should be spending more what happened
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Savings
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Confidence
•
discretionary income
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Debt – increased back to 2007 record of $14.1 trillion
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China – GDP dipped to 7% for first time – China purchases (consumers and
industries) a lot from other nations. These purchases such as copper from Chile
has severely impacted other global economies. Therefore China is impacting the
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US ECONOMY
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world economy. It has been suggested that this “might” send us into a recession
why????
•
Impact on other nations – commodities market
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Impact on Banks / Investors – Banks lend to China and deal with their
investments. – Certainly a slowdown in China is impacting our banks
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Unemployment – discussed well
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Residential construction and industrial construction????/
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Stock Market swings – discussed above
•
Debt of industry grown from $10.1 to $14.1 trillion – cheap money has increased
consumer and industry debt. If they don’t feel confident they might not spend
•
Strong dollar – impacts exports? Impacts exports – Industries who export a great
deal have found that the strong dollar is making their product more costly.
Therefore, their profit margin is shrinking. The dollar is forecasted to appreciate
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Business – production will grow 2.6%, 3.0 in 2017,
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Corporate profits – global earnings per share is declining – several quarters
why??? — could it be the strength of our dollar – what else.
•
US ECONOMY
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References
Kocherlakota, N. (2015). Fiscal Policy and the Long-Run Neutral Real Interest Rate.
Mitchell, J. (2016). The U.S. Economy’s Latest Growth Is Looking Increasingly Frail. Retrieved
from http://blogs.wsj.com/economics/2016/01/04/the-u-s-economys-latest-growth-islooking-increasingly-frail/
You are a corporate executive of a global construction company
(residential and commercial property.) It is your job to
understand the economy. You have read several articles that our
economy is heading for a recession.
• Based upon our discussion in class, what do you think the
economy will be like in 2016. Use multiple indexes to support
your answer.
• How might your understand of the US 2016 economy impact
your company (consider expansion, cost of money, hiring, profit,
inventory, and inflation).
Congress passed its spending bill in December. Specifically where
did we decrease taxes? What are some of the winners of
increased spending. Research
Do corporations pay their fair share of taxes? Discuss one
suggested tax reform – research
Discussion on economy – What are your thoughts????
Forecasted GDP for 2016?
• Comment: core inflation excludes food and energy may rise to 2.2%
next year (medical 3% to 3.5%, prices of service 3%, rents 3-4%)
Be able to discuss factors that impact forecast:
• Price of oil decreasing and will it continue
• More money to spend – but are people spending?
• Oil producing companies
• Oil producing nations?
• Money invested in sustainable fuels
• Consumer
• Spending
• Savings
• Confidence
• discretionary income
• Debt – increased back to 2007 record of $14.1 trillion
• Residential building – Median home price to income is 4.1 was 2.1
• Other nation’s economy
• China – GDP dipped to 7% for first time
• Impact on other nations – commodities market
• Impact on Banks / Investors
• Impact on American businesses
• Unemployment
• Residential construction
• Stock Market swings
• Debt of industry grown from $10.1 to $14.1 trillion
• Strong dollar – impacts exports? Impacts imports
• Business – production will grow 2.6%, 3.0 in 2017,
• Corporate profits – global earnings per share is declining – several
quarters
•
Inflation –
…
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