Transcript Ch2097
Chapter 20 Market And Industry Analysis ®1999 South-Western College Publishing 1 Gross Domestic Product (GDP) • Most Widely Used • Quarterly and Annually Data • Value of All Goods and Services • Gross National Produce (GNP) • Components ®1999 South-Western College Publishing 2 Quarterly And Annual Data • Advanced Estimates – Quarterly • Preliminary Estimates • Revised Estimates • Benchmark Revisions – Past three years ®1999 South-Western College Publishing 3 Reporting GDP Jan. Feb. Mar. Quarter 1 Apr. May Advanced Estimate Preliminary Estimate ®1999 South-Western College Publishing June July Revised Estimate Benchmark Revision 4 Components Of GDP • • • • • • Consumption Investment Government Spending Net Exports GDP Inflation ®1999 South-Western College Publishing 5 Measuring Consumption 69% • Car Sales • Retail Sales • Personal Income/Expenditures ®1999 South-Western College Publishing 6 Measuring Investment 13% • Housing Starts/Building Permits • Durable Goods Orders • New Home Sales • Construction Spending • Factory Orders/Business Inventories ®1999 South-Western College Publishing 7 • Measuring Government Spending – 19% – Public construction • Measuring Net Exports – -0.5% – Merchandise trade balance • Measuring Inflation – Producer price index – Consumer price index ®1999 South-Western College Publishing 8 Measuring GDP 100% • Purchasing Managers’ Index • Employment • Industrial Production Capacity ®1999 South-Western College Publishing 9 Business Cycle • Trough – Low point • Peak – High point • Expansion – Before a peak • Contraction – After a peak ®1999 South-Western College Publishing 10 Composite Index • Coincident – Move directly with business cycle • Leading – Lead business cycle • Lagging – Lag business cycle ®1999 South-Western College Publishing 11 Leading Index Components Manufacturing Hours Unemployment Claims Vendor Performance Manufacturers’ New Orders Orders for Plant And Equipment Private Housing Units Money Supply ®1999 South-Western College Publishing Consumer Expectations Index of Stock Prices Sensitive Materials Prices Unfilled Orders 12 Coincident Index Components • Employees on Nonagricultural Payrolls • Personal Income less Transfer Payments • Index of Industrial Production • Manufacturing and Trade Sales ®1999 South-Western College Publishing 13 Lagging Index Components • Average Duration of Unemployment • Ratio of Manufacturing and Trade Inventories to Sales • Changes in Labor Costs per Unit of Output • Average Prime Rate • Commercial and Industrial Loans • Ratio of Installment Credit to Personal Income • Change in Consumer Price Index for Services ®1999 South-Western College Publishing 14 Federal Government and Fiscal Policy • Fiscal Policy • Civilian Unemployment Rate • Budget Deficits ®1999 South-Western College Publishing 15 Federal Reserve Bank • • • • • • Monetary Policy Bank Reserves Recession Open Market Operations Bank Discount Rate Federal Funds Rate ®1999 South-Western College Publishing 16 Economy And Financial Markets • Bond Market – Yield to Maturity • Inflation • Risk of default • Stock Market – Leading indicator of trends in real GDP ®1999 South-Western College Publishing 17 Valuing The Overall Stock Market • Book Value – Ratio of stock’s price to book value • Dividends – Price/dividends ratio – Price/earnings ratio • Earnings – P/E ratio – E/P ratio ®1999 South-Western College Publishing 18 Industry Analysis • Industrial Life Cycle • Demand and Supply Analysis • Industry Profitability • International Competition and Markets ®1999 South-Western College Publishing 19