economic about Data Analysis (excel and powerpoint)

The

National Economy

National Economy Issues  GDP

 Calculated by the Bureau of Economic Analysis (BEA)

 Measures production of final goods and services each quarter.

 C + I + G + NX

 Revisions (Advanced, Second, and Third)

 Only 50% of data is available on advanced report: uses extrapolation to

complete data set.

 Adjusts for Inflation: Chained vs. Nominal GDP

 Does not measure the underground Economy  Can we measure such? Research methodology:

 Surveys

 Compare national expenditures in excess of national income.

 Compare employed people exceeding the number of jobs in the economy.

 Compare electricity usage in excess of that required for reported production.

 Analyze money supply usage in excess of that required for reported

production.

National Economy Issues

 Genuine Progress Indicator (GPI)  GDP does not make any subjective evaluations regarding the virtue or aesthetic

qualities of production.

 GDP measures value based on market prices only.

 GPI Corrects GDP for environmental degradation, inequality, crime, loss of leisure

time, public infrastructure, volunteer activities, and housework.

 International Comparisons

 Purchasing Power Parity (PPP)

 When making international comparisons PPP adjusts currency values for the

amount of goods a given unit of currency can buy.

 Absent PPP adjustments China is ≈ 62% the size of the U.S (IMF 2017).

 With PPP adjustments China is ≈ 120% the size of the U.S. (IMF 2017).

 Growth Rates?

 For China, working backwards with growth rates, 1952 per capita income in

China would have been $279, an unsustainably low figure.

 Per Capita Income

 Better gauge of standard of living than overall GDP.

National Economy Issues

 International Statistics

 IMF Direction of Trade Statistics

 High monthly volatility in export and import data.

 Irreconcilable data sets

 Global imports do not equal global exports.

 Globalization

 Sales data often inaccurately reflects where production takes place.

 Assembling and sales often occur in different regions.

 Labor Productivity

 BLS

 Typically measured as: output/labor hours

 Problem: how to measure labor hours and output.

 At-home work may overestimate productivity.

 “inside the box” effect: inaccurately estimating quality changes in

productivity.

 Services are particularly difficult to quantify.

National Economy Issues

 Consumer Confidence  Leading indicator since economy weighted largely in consumer

expenditures.

 Conference Board

 Michigan Survey of Consumers

 Savings Rates

 FRED

 BEA

 Why is it important:

 Saving → Investment → Capital Formation → Economic Growth

 Personal Savings is not the only type of savings

(e.g. business retained earnings and foreign savings)

 Some economists believe a genuine savings rate” should measure

actual investment which would be closer to 20% of GDP.

 Including durable consumption goods would take it to over 25%