Economics The Macroeconomic Calendar Essay - 1051 Words

THE MACROECONOMIC CALENDAR Each month government agencies like the Departments of Labor and Commerce, and private institutions publish a variety reports addressing leading, lagging, and coincident indicators. 1. Lagging indicators, like the unemployment rate and corporate profits, are of little help in forecasting since they change only after the economy begins to shift. 2. Coincident indicators, like personal income and industrial production that move simultaneously with the business cycle are equally unhelpful in forecasting the future. 3. Leading indicators that move in advance of changes in the business cycle are more helpful. Housing starts usually start to increase several months before the emergence of full recovery, and tail off†¦show more content†¦At the short end the Federal Reserve has raised interest rates to combat inflation. While this action alone can raise the short end higher than the long and, rates at the long end may also begin falling as bondholders demand more long bonds in anticipation of recession and further deflationary pressure on rates. The inverted yield curve is generally viewed as a strong signal of the coming recession. A steep, upward sloping yield curve can be interpreted as an expansionary signal. When a recession ends, long-term rates are low in order to stimulate a recovery. As more businesses anticipate the recovery, they initiate new capital projects. To finance these they seek long-term money. This increased capital demand increases long-term rates, while the Fed, continuing the stimulus, holds short-term rates low. This results in a steeper yield curve than would normally occur in a strong economy. MANAGING THE BUSINESS CYCLE Inventory Control and Production When a recession hits it is costly to have large amounts of product inventory on hand. It can be equally costly to be caught with too little in inventory as the economy recovers. The recipe to control inventory would be to cut production and liquidate inventories having anticipated a recession an increase production and inventories in anticipation of the recovery. Supply-chain Management Large, unused stockpiles of components and inputs used in production can have a major impact onShow MoreRelatedEcon 2301 Study Guide1079 Words   |  5 PagesECON 2301: Principles of Macroeconomics Hennessy ECON 2301 Principles of Macroeconomics Time: Th 7:05 pm – 9:45 pm Synonym: 40512 Section: 023 Room: NRG2 2120 Instructor: Gregory Hennessy Office: NRG PB3 Hours: Th 6:30 pm – 7:00 pm Th 9:45 pm – 10:15 pm And by appointment Phone: Email: Course Description Principles of Macroeconomics deals with consumers as a whole, producers as a whole, the effects of government spending and taxation policies, and the effects of the monetary policy carriedRead MoreEssay on Macroeconomics Stability1407 Words   |  6 Pagesabove statement that macroeconomic stability as well as building long-term growth have been critical in the success of these countries. 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