Essay on Pepsico Economics Case Study

2871 Words Jun 6th, 2013 12 Pages
Corporate Economic Conditions Report 17 April 2013 | PepsiCo | SECTION 1: EXECUTIVE SUMMARY

Economic Conditions Overview:

Overall economic conditions are expected to improve over the next two quarters. As part of the monetary policy (quantitative easing part 3), Federal Reserve continues to buy bonds to influence low interest rates in order to increase investments. A decrease in unemployment and an increase in private consumption will drive the economic growth for the next two years.

Expected direction of change in economic aggregates:

The drivers for the major changes in the economy will be steady growth in GDP and the decrease in unemployment. Additionally inflation rates are forecasted to remain unchanged and
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The Sequester includes spending cuts with amounts worth $85 billion. Such cuts will have significant impact on the GDP and can reduce the GDP average over the next two quarters by 0.25% to 1.85%. According to Economist Intelligence Unit report, if the Sequester remained activated for an entire fiscal year, GDP would fall to 1.6% and then to 1.4% by end of 2013 calendar year. This will not have a devastating impact on US economic recovery, however, will delay the rebound from the recession years of 2008-2009.

UNEMPLOYMENT RATES

From 5.8% in 2008, the unemployment rate spiked to 9.6% in 2010 and was marked at 8.1% in 2012. The unemployment rate has been stable since September 2012, hovering just below 8.0%. By February of 2013, the reported unemployment rate is 7.7%.

Economic growth for 2013 is expected at 1.9%, decreasing the unemployment rate to 7.5% by end of the year. Unemployment rate is predicted at 8.0% by the end of Q2 2013. By the end of 2014, forecasted economic

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