Eco 372 Week 4 Learning Team Assignment Economic Indicator Forecast

Economic Indicator Forecast

ECO/372

Economic indicators are a way to judge how the economy is doing and how the economy will be in the future. This is an important statistic, which many types of people and businesses use to make important decisions. The purpose of this paper will be to compare and contrast two-year forecasts, for each economic indicator. Then explain the difference among the forecasts for each indicator and explain which forecast is most accurate. Followed by an explanation of how the chosen forecast will affect operational and planning issues in the auto industry.

The first two-year forecasts that will be compared are on auto sales. According to the International Business Times, J.D. Power and Associates lowered its two-year auto sales forecast. J.D. Power and Associates have cut their forecast for 2010 from 11.6 million to 11.5 million and in 2011 from 13.2 million to 12.9 million auto sales in the United States (International Business Times, 2010). Whereas the other forecast has also lowered its numbers for auto sales, the numbers are quite different. “Michelle Krebs from Edmunds Auto Observer reports that the forecasting firm Global Insight has lowered its forecast for auto sales for this year and the next few years after this past week's financial events and September's car sales reports” (Krebs, 2008). Global Insight forecast has dropped from 15 million to 14.5 million auto sales in 2010 (Krebs, 2008). Their forecast has also dropped for 2011 from 15.8 million to 15.5 million auto sales (Krebs, 2008). While these two forecast are between two and three million auto sales apart they both show that auto sales are increasing but at a slower pace.

While there are no two-year forecasts about what the Producer Price Index is going to forecast, one can look directly at the Producer Price Index information. Since the automotive industry falls into the finished goods category, this is the category that we will examine. The Producer...