Research the current value of the following economic indicators: unfilled orders

Question

Research the current value of the following economic

indicators:

unfilled orders

Based on your research, write a paper of 500-750 words that addresses the following:

The economic data required for this assignment can be found on the Federal Reserve Bank of New York website ("http://www.newyorkfed.org/index.html">http://www.newyorkfed.org/index.html)

*I NEED HELP WITH THIS PART ASAP! Prepare this assignment according to the APA guidelines found in the APA Style Guide. An abstract is not required.

Explanation / Answer

Gross domestic product (GDP) is the market value of all officially recognized final goods and services produced within a country in a given period of time. GDP per capita is often considered an indicator of a country's standard of living;[2][3] GDP per capita is not a measure of personal income (See Standard of living and GDP). Under economic theory, GDP per capita exactly equals the gross domestic income (GDI) per capita (See Gross domestic income).

GDP is related to national accounts, a subject in macroeconomics. GDP is not to be confused with gross national product (GNP) which allocates production based on ownership.

A consumer price index (CPI) measures changes in the price level of a market basket of consumer goods and services purchased by households. The CPI in the United States is defined by the Bureau of Labor Statistics as "a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services."[1]

The CPI is a statistical estimate constructed using the prices of a sample of representative items whose prices are collected periodically. Sub-indexes and sub-sub-indexes are computed for different categories and sub-categories of goods and services, being combined to produce the overall index with weights reflecting their shares in the total of the consumer expenditures covered by the index. It is one of several price indices calculated by most national statistical agencies. The annual percentage change in a CPI is used as a measure of inflation. A CPI can be used to index (i.e., adjust for the effect of inflation) the real value of wages, salaries, pensions, for regulating prices and for deflating monetary magnitudes to show changes in real values. In most countries, the CPI is, along with the population census and the USA National Income and Product Accounts, one of the most closely watched national economic statistics.

Nonfarm payroll employment is a compiled name for goods-producing, construction and manufacturing companies in the US. It does not include farm workers, private household employees, non-profit organization employees, or government employees

It is an influential statistic and economic indicator released monthly by the United States Department of Labor as part of a comprehensive report on the state of the labor market.

The Bureau of Labor Statistics releases preliminary data on the third Friday after the conclusion of the reference week, i.e., the week which includes the 12th of the month, at 8:30 a.m. Eastern Time;[1] typically this date occurs on the first Friday of the month. Nonfarm payroll is included in the monthly Employment Situation or informally the jobs report and affects the US dollar, the Foreign exchange market, the bond market, and the stock market.

The figure released is the change in nonfarm payrolls (NFP), compared to the previous month, and is usually between +10,000 and +250,000 during non-recessional times. The NFP number is meant to represent the number of jobs added or lost in the economy over the last month, not including jobs relating to the farming industry.

Capacity utilization is a concept in economics and managerial accounting which refers to the extent to which an enterprise or a nation actually uses its installed productive capacity. Thus, it refers to the relationship between actual output that 'is' actually produced with the installed equipment, and the potential output which 'could' be produced with it, if capacity was fully used.

If market demand grows, capacity utilization will rise. If demand weakens, capacity utilization will slacken. Economists and bankers often watch capacity utilization indicators for signs of inflation pressures.

It is often believed that when utilization rises above somewhere between 82% and 85%, price inflation will increase. Excess capacity means that insufficient demand exists to warrant expansion of output.

All else constant, the lower capacity utilization falls (relative to the trend capacity utilization rate), the better the bond market likes it. Bondholders view strong capacity utilization (above the trend rate) as a leading indicator of higher inflation. Higher inflation%u2014or the expectation of higher inflation%u2014decreases bond prices, often prompting a higher yield to compensate for the higher expected rate of inflation.

Implicitly, the capacity utilization rate is also an indicator of how efficiently the factors of production are being used. Much statistical and anecdotal evidence shows that many industries in the developed capitalist economies suffer from chronic excess capacity. Critics of market capitalism, therefore, argue the system is not as efficient as it may seem, since at least 1/5 more output could be produced and sold, if buying power was better distributed. However, a level of utilization somewhat below the maximum typically prevails, regardless of economic conditions.

The Advance Report on Durable Goods Manufacturer's Shipments, Inventories and Orders, or the Durable Goods Report, provides data on new orders received from more than 4,000 manufacturers of durable goods, which are generally defined as higher-priced capital goods orders with a useful life of three years or more, such as cars, semiconductor equipment and turbines.More than 85 industries are represented in the sample, which covers the entire United States.

Figures are provided in current dollars along with percentage change from prior month and prior year for new orders, total shipments, total unfilled orders (orders that have been booked but not filled as of month-end) and inventories. Revisions are also included for the prior three months if they materially affect prior-released results.

The data compiled for consumer durable goods is one of the 10 components of the Conference Board's U.S. Leading Index, as growth at this level has typically occurred in advance of general economic expansion.

Housing starts is an economic indicator that reflects the number of privately owned new houses (technically housing units) on which construction has been started in a given period. This data is divided into three types: single-family houses, townhouses or small condos, and apartment buildings with five or more units.

Each apartment unit is considered a single start. The construction of a 30-unit apartment building is counted as 30 housing starts.

An aggregated measure of the sales of retail goods over a stated time period, typically based on a data sampling that is extrapolated to model an entire country. In the U.S., the retail sales report is a monthly economic indicator compiled and released by the Census Bureau and the Department of Commerce. The report covers the previous month, and is released about two weeks after the month-end. Comparisons are made against historical data; year-over-year comparisons are the most-reported metric because they account for the seasonality of consumer-based retail.

The S&P 500, or the Standard & Poor's 500, is a stock market index based on the market capitalizations of 500 leading companies publicly traded in the U.S. stock market, as determined by Standard & Poor's. It differs from other U.S. stock market indices such as the Dow Jones Industrial Average and the Nasdaq due to its diverse constituency and weighting methodology. It is one of the most commonly followed equity indices and many consider it the best representation of the market as well as a bellwether for the U.S. economy.[4] The National Bureau of Economic Research has classified common stocks as a leading indicator of business cycles.[5]

The S&P 500 is maintained by Standard & Poor's, a division of McGraw-Hill that publishes a variety of other stock market indices such as the S&P MidCap 400, the S&P SmallCap 600 and the S&P Composite 1500. It is a free-float capitalization-weighted index[3] and has several ticker symbols: ^GSPC,[6] INX,[7] and $SPX.[8]

The current economic data suggest that the U.S. economy is expanding at a moderate pace, although the recovery from the recession and financial crisis still promises to be long and difficult.

Real GDP grew by 3.0 percent in the fourth quarter of 2011, up from 1.8 percent in the third quarter. Roughly two-thirds of that increase, however, was due to business inventory restocking, a temporary boost to GDP that will not be sustained in the coming quarters. The economy grew by a sluggish 1.7 percent in 2011 and the Blue Chip consensus of private-sector forecasters sees GDP rising by just 2.2 percent in 2012. The Federal Reserve has characterized the current economic recovery as `uneven and modest by historical standards.'

Total payroll employment rose by 227,000 in February. Recent monthly job gains have been encouraging, though at this pace it would still take until the end of the decade to return to a pre-recession level of unemployment.

The unemployment rate remained at a three-year low of 8.3 percent in February. Still, a broader gauge of under-employment, which includes people who have stopped looking for work or who can't find full-time jobs, is still over 15 percent. In addition, the long-term unemployment remains near record levels as the share of the unemployed population who have been out of work for six months or more is 43 percent.

The housing market remains a key drag on growth. Housing prices have yet to fully bottom out and have showed some renewed signs of decline in parts of the country. The ratio of home equity to income is at an all-time low--a measure of the enormous amount of housing wealth that has been lost due to the drop in home prices. As households feel less wealthy, they are less likely to spend, which puts a damper on the overall economy.

Average U.S. gasoline prices have risen 15 percent so far this year as geopolitical tensions in the Middle East have contributed to a sharp increase in oil prices. Analysts point out that gas prices will likely continue to rise through the spring and summer months, with some experts warning that prices could reach $5 per gallon in some parts of the country. This run-up in prices will have the effect of dampening consumers' purchasing power.

The rise in energy prices is likely to lead to a bump-up in the overall rate of inflation in coming months, though the Federal Reserve expects this increase to be temporary. The Fed generally expects inflation will run `at or below' its preferred rate of 2.0 percent (as measured by the price deflator for personal consumption expenditures) in the coming quarters.

The yield on 10-year Treasuries has dipped to an all-time low of just under 2 percent in recent months. Jitters about the debt/ financial crisis in Europe have caused global investors to seek out a relatively risk-free safe haven. This dynamic has benefited the Treasury market and has helped to push U.S. borrowing rates to very low levels.

The stock market has been on a recovery track after posting sharp declines in the latter part of last year. Since dipping to a cyclical low last October the S&P 500 has gained about 20 percent. This has been due to somewhat more positive U.S. economic data combined with some decline in the fear that the situation in Europe will spark a more serious global financial crisis.

The economic projections from the administration, the CBO, and private forecasters generally show moderate to robust growth in the next few years, though the range of predictions is relatively wide.

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CBO expects real GDP growth of 2.2 percent in 2012, in line with private-sector forecasters, before slipping to just 1.0 percent in 2013. In its forecast, CBO is obligated to assume all of the sizeable tax increases and spending reductions that are currently built into current law, but which are unlikely to occur in their totality. Beyond 2013, CBO expects fairly robust annual growth ranging between 3 and nearly 5 percent over the medium term. The administration's growth trajectory forecast is generally in line with that of CBO, though on average it is slightly more optimistic on the rate of growth, particularly in the latter part of the decade. In contrast, the private-sector Blue Chip growth forecast is more subdued than either the CBO or the administration, with annual GDP growth failing to breach the 3 percent threshold throughout the 10-year horizon.

Most forecasts see the unemployment rate declining slowly from its current elevated level. CBO, for instance, expects the unemployment rate to remain above 7 percent until the middle of the decade. Both CBO and the administration don't see the unemployment rate falling back to the pre-recession, pre-financial crisis range of just over 5.0 percent until the latter part of the decade. The Blue Chip consensus does not see the unemployment rate dipping below 6 percent at any point in the 10-year horizon.

As the economy recovers, the forecasts predict that interest rates will gradually move higher. According to CBO, the 10-year Treasury rate, which is currently at an all-time low below 2 percent, will rise to about 4 percent in 2016 and 5 percent towards the end of the decade. Both the administration and the Blue Chip consensus foresee higher interest rates than CBO over both the near and medium-term.

Rates of inflation are also expected to normalize in the coming years from their current low levels. CBO expects inflation rates to remain quite low for longer than either the administration or the private sector. Under CBO's forecast, annual growth in the consumer price index remains below 2 percent until 2016. In contrast, the Blue Chip consensus sees inflation reaching nearly 2.5 percent as early as 2014.

CBO's annual economic assumptions were adopted for use in the budget resolution and are shown in Table 7.

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The financial crisis that began in 2007 was the most intense period of global financial strains since the Great Depression, and it led to a deep and prolonged global economic downturn. The Federal Reserve took extraordinary actions in response to the financial crisis to help stabilize the U.S. economy and financial system. These actions included reducing the level of short-term interest rates to near zero. In addition, to reduce longer-term interest rates and thus provide further support for the U.S. economy, the Federal Reserve has purchased large quantities of longer-term Treasury securities and longer-term securities issued or guaranteed by government-sponsored agencies such as Fannie Mae or Freddie Mac. Low interest rates help households and businesses finance new spending and help support the prices of many other assets, such as stocks and houses.

By law, the Federal Reserve conducts monetary policy to achieve maximum employment, stable prices, and moderate long-term interest rates. The economy is recovering, but progress toward maximum employment has been slow and the unemployment rate remains elevated. At the same time, inflation has remained subdued, apart from temporary variations associated with fluctuations in prices of energy and other commodities. To support continued progress toward maximum employment and price stability, the Federal Open Market Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. In its December 2012 statement, the Committee indicated that it currently anticipates that a target range for the federal funds rate of 0 to 1/4 percent will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than half a percentage point above the Committee's 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored.

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