Current Macro

SUBJECT: Assess the Success of Current Efforts at Macro Economic Management and Predict Fed Decision SITE AND PURPOSE: The Federal Reserve Bank’s site includes a summary of the economic information the Board of Governors and the Federal Open Market Committee use to determine monetary policy. You will be using the Beige Book. The Conference Board publishes surveys of consumer and business confidence. Together with information developed in earlier assignments, you can make an educated guess at what the Federal Open Market Committee will do regarding interest rates and use of other tools to manage the macroeconomy. SITE ADDRESS, INSTRUCTIONS AND ASSIGNMENT: Go to http://www(dot)federalreserve(dot)gov/monetarypolicy/beigebook/default.htm Find the most recent month that shows a link in blue (may say html). Select that link. It will take you to the National Summary. (Note: if you get to a year that has passed, scroll down the page to the bottom of the calendar. You will see a list of years. Select the current year.) The National Summary is a good summary of the economic activity and status of the nation. Describe it in your own words. Then, look at the list of cities on the left side of the screen. These are the Federal Reserve district banks. Each one produces a similar summary for its district. Choose one for a part of the country that interests you and describe what has happened to retail sales, construction, agriculture, manufacturing or other key sectors in that district. Remember to read the one for Kansas City, since Denver is part of the region of the country covered by the Kansas City Federal Reserve Bank. Do you think we in the Kansas City District are worse off or better off than people in the other region you chose? Why? Give your best forecast of what will happen in the economy in the next 9-12 months. Go to the Conference Board's home page (www(dot)conferenceboard(dot)org) and read the most recent reports on consumer confidence and CEO confidence to answer the following questions: What has happened to the consumer confidence index in the past few months? Why is consumer confidence and important indicator? What is the likely effect of the change in consumer confidence on the economy? Explain this using the multiplier concept. What has happened to expectations of business executives over the past few months? Do the consumer confidence and business executives' expectations match? If not, what do you expect business actions will be in the next few months? Think about hiring plans, production plans, inventory levels, and investment in new production or new productivity tools? Finally go back to your assignments in weeks 3, 4, 5 to update macroeconomic indicators of GDP growth, unemployment and inflation. Have these improved or deteriorated since you last looked? (There will likely be new data.) Then, predict the action the Federal Open Market Committee will take at its next meeting (and give the date of the next meeting). Use all the information noted above and anything else you find relevant. Based on this review, what do you think the Federal Open Market Committee will do at its next meeting? The options are increase interest rate targets, decrease interest rate targets, or keep targets the same. What other actions might they take? Explain and justify your prediction. Your paper of 2-4 pages should be well-written, and have references in either APA or MLA style.

Week 3 Assignment:

SITE ADDRESS, INSTRUCTIONS AND ASSIGNMENT: ·         

• Go to www(dot)bea(dot)gov.  Under “National” click on “Gross Domestic Product.”  Look at two tables that will appear in excel : Current dollar and real GDP, and Percent change from preceding period.  In each file, there are segments, each with two columns.  You will want the Annual Data (first segment) and the “GDP percent change based on chained 2009 dollars” column.  You might want to save the tables for making your own table and for future reference.

Week 4 Assignment:

SITE AND PURPOSE: The Bureau of Labor Statistics site contains much data and educational information on inflation, and the characteristics of its chief measure, the consumer price index.  The purpose will be to have some personal connection to the level of inflation, and to understand the CPI in ways the textbook cannot provide. SITE ADDRESS, INSTRUCTIONS AND ASSIGNMENT: 

• Go to http://www(dot)bls(dot)gov/cpi,  scroll down to “Get Detailed Statistics” and click on “Inflation Calculator.” Pick a year in the past and find out how much prices have risen since then.  You might want to pick the year you got your first job, or made a major purchase such as a car, home, etc.  The calculator will show you what you will need now to have the same spending power as $100 then. You can enter any amount up to $10,000.  Record your figures.

Week 5 Assignment:

SUBJECT:  Unemployment  – Relation to the Business Cycle SITE AND PURPOSE: The Bureau of Labor Statistics site is the source of current an historical data on the unemployment rate.  Information about unemployment is presented both for the national economy and for regions and states.  The purpose will be to see what the current unemployment rate is, how it is different in different parts of the country, and how it compares to past time periods. SITE ADDRESS, INSTRUCTIONS AND ASSIGNMENT: 

• Go http://www(dot)bls(dot)gov. On the left side, select “unemployment” from the subject area list, then “National Unemployment Rate.” Find the latest unemployment rate and past annual rates.  For the annual rates, scroll down to find “Annual Averages” and find the green picture of a dinosaur under the heading “unemployment rate.”  Click on the picture of the dinosaur. It will show you a table of unemployment since 1948 if you specify in the drop down box.  Capture the unemployment data for each year beginning in 1990.