Gift and Novelty Economics Forecast

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Economic Forecasts The retail consumer market must take into consideration many indicator forecasts that help estimate what the economic market will be like for the future. The following information contains two or more forecasts based on our teams six pre-selected indicators. This team will provide reconciliation between both forecasts and will apply economic theory in deciding which one may be the most relevant to the gift and novelty industry. GDP Information retrieved from the Economist Intelligence Unit Data Services (2005), the GDP (in billions) is expected to be 13034.5 in 2006 and 13766.2 in 2007. However, according to the data retrieved from the Blue Chip economic indicator, the forecasted GDP (in billions) is 12907 for 2006 and 13617 in 2007 (The White House, 2005). Foreign investment is a factor that is increasing the overall GDP. Over a period of time this will eventually bring higher gross domestic investments, resulting in more productive physical capital in the U.S economy. The additional capital will make labor more productive, which provides an increase in GDP and wages. Based on this information, it is thought that the EIU forecast is more correct than the Blue Chip indicator. Unemployment Unemployment is another area that can affect this industry. Data retrieved from the Economist Intelligence Unit (EIU) projects that the unemployment rate in 2006 will be at 5% (Economist Intelligence Unit, 2005). Data derived from the Blue Chip consensus indicator, however, projects the unemployment rate for 2006 will be at 5.2% (The White House, 2005). By taking into consideration many outside indicators, such as the GDP—that show a slow but constant growth, will allow private investment to remain constant. This will encourage private industry to maintain their employment at a constant level. In understanding what this nation faces in the near future, this team recognizes that many of the Baby Boomers will retire, which reinforces the premise that unemployment will eventually stay at or fall below 5 %. Housing Starts Housing starts seems to be one of the most visible in regards to economic growth. Based on the analytical tables provided by National Association of Home Builders (NAHB) and Steele Analytics, 2005 and 2006, housing starts will decline slightly. NAHB shows that 2005 housing starts (in thousands) at 1,969 decreasing in 2006 to 1,855 (NAHB, 2005). Steele Analytics also shows housing starts (in thousands) for 2005 start at 1,883 with a slight decrease in 2006 to 1,825 (Steele Analytics, 2005). It

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