Advantages And Disadvantages Of Density Forecasts

Byun, K. & Frey, C. (2012). The U.S. Economy in 2020: Recovery in uncertain times. U.S. Economy

Identify economic factors that affect the real GDP, the unemployment rate, the inflation rate, and a key interest rate. How do you predict the economy will perform in the next two years given the current state of two of the economic factors you identified? How might your organization be affected by these changes?

The news informs everyone on a daily basis that the United States has the largest economy and that it is looking to be in great shape since four years ago. To some Americans it seems otherwise. The unemployment rate in 2007 was 4.6% compared to unemployment rate in 2012 at 7.5%. The U.S inflation rate ended in October 2012 after twelve months was 2.16% which is 0.11% higher than the one in September. The U.S inflation forecast consists of apparel, education and

It seems that the United States is approaching a crucial moment both for the real economy and for the financial crisis that caused this severe recession. Of course, this is good news that comes after many months of bad news, but we must continue to take into account how extremely difficult it is to forecast the behavior of the economy and financial markets during the crisis. The general predictions have been wrong again and again, and unexpected and even unprecedented events have followed one another closely. A cautious optimism should be the order of the day. We fear that the recent reactions of financial markets and some analysts reflect too much optimism without paying sufficient attention to uncertainty. Public policies should continue

As economic growth increases moderately in 2014, the rate of inflation is expected to remain below 2 percent. The price of goods in the country will continue to be restricted by global competition and use of production capacities that are relatively low as compared to historical averages. In addition, the inflation rate will remain below 2 percent because of decrease in energy prices and small increase in the prices of food. Nonetheless, while energy prices continue to reduce this year, the percentage of the decrease will be less while food prices may regain normal rate of growth.

The Great Recession lasted from December of 2007 until June of 2009, making it the longest recession since World War II. During this time, gross domestic product (GDP), inflation, unemployment, and interest rates were all greatly affected. The previously mentioned metrics are used to compare today’s economy to the economy during the Great Recession to see how the United States has rebounded since 2009. Monetary and fiscal policies were also implemented to combat the recession, and their effects determine whether or not the policies have a lasting effect in continuing to help the U.S. economy rebound.

• As previously stated in the executive summary, the United States’ economy is currently stagnating. From week to week we may see a rise in one indicator while there is a fall in another indicator, but none of the rises or falls are drastic enough to have an overwhelming impact on the economy as a whole. Although the economy is not near as strong as it was before the 2008-2009 recession, arguably one of the biggest economic crises of the past decade, there has been much growth and strength throughout the past few years with this year being the first year in which the economy is in somewhat of a holding pattern. I believe, that even with the little growth and movement of the United States economy over the past year, it is still perhaps one of the strongest economies in the world at the moment.

Consumer expenditures rising during this term will move the aggregate demand curve to the right as increased spending increases demand. This BLS report indicates that the next term should show statistical aggregate demand increases, and according to the Classical model perspective encourages a laissez-faire approach concerning correction of the long-term economic factors (Colander, 2010). The Classical model works perfectly as consumer expenditures are trending on the rise when factoring consumer expenditures. Until a more apparent downturn shows itself, the invisible hand should continue to work naturally.

Economics is often called the "science of decision making." The decisions that economists analyze range from personal decisions such as how big a pizza to order or whether to buy or lease a new car to the decisions the federal government makes about things like the size of our military. Economists use information about these, and other decisions, to develop indicators that can be used to determine the health of our economy. Just as a physician relies on indicators such as temperature, blood pressure and heart rate to determine the health of a patient, economists use indicators like gross domestic product growth, the unemployment rate and the rate of inflation to predict our

The U.S. economy appears to be on track for a sustainable recovery from one of the biggest economic problems in history, the Great Recession. Unemployment and inflation are both down from where they had been and things have shifted towards recovery. Inflation is likely to remain in an acceptable zone, but policymakers must be vigilant concerning inflation expectations. Employment has recovered slowly but surely as well. Uncertainty/Fear appears to be growing among American, particularly with the unrest in the Middle East, but studies are showing that faith in economists (and the Fed leaders) among citizens is growing rapidly. Due to the uncertainty, flexibility is

Ever since World War II the United States has experienced many recessions. There have been many terrible recessions that have hit this great country hard. What is a recession people may wonder? A recession is a significant decline in activity across the economy, lasting longer than a few months. It is visible in industrial production, employment, real income and wholesale-retail trade. The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country 's gross domestic product (GDP). Although, the recession of 2001 wasn’t a dramatic and horrible recession, it was the end of the longest expansion our country had seen since WWII. The expansion following the recession of 1991 was 10 years up until this recession of 2001. Furthermore, this recession was difficult and was hard to deal with and overcome, because during the time of this recession our country experienced 9/11.

Makridakis, S., Wheelwright, S. C. & Hyndman, R. J. (1998). Forecasting Methods and Applications, (3rd Edition). New York: John Wiley & Sons, Inc.

Theories about how the economy works and what will happen in the economy where there is monetary policy or fiscal policy intervention are appropriate in assisting policy-makers understand the possible implications of decisions they make or are under consideration. However, they are rarely complete models and often outcomes cannot be predicted. Reintroduction of a theory suggests that new evidence in support of the theory has been reported.

2. Why focus on fixing the forecasts? What are the implications of a poor forecast?

Economists use the retail sales data in their models to make predictions on a wide variety of economic issues. Again, because retails sales accounts for such a large proportion of GDP, it is used along with other factors as a way to estimate the direction of the quarterly and annual GDP numbers. Used in conjunction with data such as the consumer price index, it is also very relevant for inflation forecasts as the data can offer glimpses into the affects of rising or falling prices. This in turn is closely tied to predictions for the direction of future interest rates as potential additional government action. Finally the retail sales data can be used to estimate