Economic Indicators Forecast Essay

1654 words - 7 pages

Abstract as you can see from this paper there are many tools that are utilized by economist to predict the status of the country. In addition there are a variety of tools utilized to predict and forecast the direction of the economy. With so many indicators to choose from such as, Gross Domestic Product, comparative analyzes, trending historical data, and the NAHB's report, one might wonder which tool will provide the most accurate data to predict the state of the economy. Understanding all the tools available is certainly important for economist; however, it's equally critical for economist to know when and where to use them. This is what separates the great economists from good ones!Economic Indicator ForecastEconomic indicators are used by economists to understand the status of a given country's economy. These indicators provide historical review of where an economy has been as well as what trends are likely to continue in the future. To help predict even further where an economy might be heading, economists use forecasts. Forecasts are where economists expect the economy to go based on a series of data. There is a forecast for the economy, as well as forecasts for each of the major economic indicators used to help understand the economy. Contrasting different forecasts for the same data can help users better understand the predicted position of the economy.Many markets have an interest in the amount of disposable income households will have available to them in the coming years. Economists follow the trends in all economic indicators so they are able to better predict the success of their industry. Of course, the variable real disposable income is more important to industries concerned about the amount of extra money consumers will have on hand.2007 Q32007 Q42008 Q12008 Q22008 Q32008 Q42007 Avg2008 AvgWachovia RDI3.22.82.72.93.13.33.42.8NARRDI4.43.03.02.52.63.03.62.9Table taken from Wachovia and NAR websites, money is in billions of dollars.The first forecast examined in the comparative analysis of personal income was one put together by the Wachovia Bank economists. The second forecast examined in the comparative analysis of personal income was put together by the National Association of Realtors. Both parties have significant interest in how much "extra" money consumers have. The bank wants to know how much consumers will be investing, and how much they will be borrowing. The National Association of Realtors is more interested in how many and how likely consumers are to sell homes and investment properties.The comparison of the two 18 month forecasts from mid 2007 to the end of 2008 shows the increases in real disposable income happening at different increments and along a different timeline. However, both Wachovia and Realtor Research come to very similar averages at the end of 2007 and 2008. Both groups started with the same data, past and current trends, so the discrepancy seems to be how quickly the changes in real disposable income...

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