Five Economic Indicators Second and Third Quarter 2004
1.Gross Domestic Product (GDP).
GDP is the market value of all final goods and services produced within a country in a given time period. There are two ways to measure GDP, the expenditure approach and the income approach. The expenditure approach measures GDP by adding together consumption expenditure, government purchases, investment, and net exports. The income approach for GDP equals net domestic product at factor cost plus indirect taxes less subsidies plus capital consumption.
Second Quarter: 3.3% Third Quarter: 3.9%
The amount of people who want jobs but cannot find determines the amount of unemployment there is. The unemployment rate is the percentage of people in the labor force who are unemployed. This number is obtained monthly by taking the total amount of people who are unemployed, dividing it by the total labor force and multiplying it by one hundred.
Second Quarter: 5.6% Third Quarter: 5.5%
The consumer confidence survey is based on representative sample of 5,000 U.S households. This report shows how the consumers are feeling about spending his or her money in the economy.
Second Quarter 92.9 % Third Quarter: 90.5%
4. Personal Income and Disposable Income.
Personal income is the money made by a household before the state and federal taxes are taken out. Once the government has deducted the taxes, consumers are left with disposable tax, which can now be used for spending or saving.
Personal Income- Second Quarter: 6.4% Third Quarter: 3.3%
Disposable Income- Second Quarter: 6.0% Third Quarter: 3.1%
Personal Consumption Second Quarter: 4.7% Third Quarter: 6.2%
5. Imports and Exports. ( Current account deficit)
Exports are items that are developed in the U.S and are sold to the rest of the world . Imports are items that the rest of the world make and are bought by the U.S. Net exports is the value of exports of goods minus the value of imports of goods and services. Deficit Sep. 2004=50.9 billion Deficit Oct.= 55.5 billion
(billions) July August September October
Exports 95,892 96,234 97,493 98,016
Imports 146,488 150,095 148,418 153,526
Net Exports -50,596 -53,861 -50,925 -55,510
The Bull Case:
Personal consumption expenditures was a major contributor to the increase in GPD. The growth of GDP was also influenced because of an increase in PCE and the decrease of imports wich compensated by a down turn in private inventory investment.
Due to a decrease in unemployment from the second to the third quarter, an increase in employment will produce more income for people. This means sales will rise and GDP will rise as well.
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