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1 Topic
Each student will act as an economic forecaster for the United States economy.
Accordingly, you will prepare a report including a forecast for the United States
economy. The forecast will include what you expect the performance of the
economy will be in the third and the fourth quarters of 2015. As a forecaster,
you will use indicators from the data sets that are available in the course web
page. Some of these indicators are released on a weekly or a monthly basis
before the end of a quarter. Forecasters use these indicators to forecast the
performance of the economy in that specific quarter.
Using these indicators, you will describe the current state of the United
States economy. In this section, you will only use the 2014 and 2015 data for
income. consumption and sales, investment and inventory, housing prices and
sales, mortgage rates, prices and inflation, unemployment and benefits, labor
wages, average hours, interest rates, exchange rates, stock prices, oil prices, the
trade balance. and others. The indicators that will be used include the industrial
production and capacity utilization, consumer confidence. retail sales, auto sales,
the index of pm’chasing managers, manufacturing and trade inventories, new
home sales. existing home sales. building permits, housing starts. the house
price index, construction spending, mortgage rates, the money stock, crude oil
prices, the nonfarm payroll employment, the unemployment insurance claims,
the Federal funds rate. the ten year treasury yield, the S&P 500 index, the
Dow Jones index. the Nasdaq, the trade weighted exchange index, and other
indicators that will be discussed in class. You will use these data to forecast
the economic conditions in the United States in the third and fourth quarters of
2015. In addition, you will explain the impact of the adopted monetary policy
and fiscal policy on the economy. In your forecast. you will describe how the
economy is expected to perform. This is based on the information available in
2014 and 2015, and your knowledge about policy decisions. You need to use your
understanding of macroeconomic theory to explain and support your forecast.
The first section of the report will include a forecast of gross domestic prod-
uct. This section will include a forecast of the components of national income
including consumption spending, investment spending, government spending,
and net exports. The second section will include a forecast of inflation, core in-
flation, energy prices, and food prices. The third section will include a forecast
income, consumption and sales. investment and inventory, housing prices and
sales, mortgage rates, prices and inflation, unemployment and benefits, labor
wages, average hours, interest rates, exchange rates, stock prices, oil prices, the
trade balance, and others. The indicators that. will be used include the industrial
production and capacity utilization. consumer confidence, retail sales, auto sales,
the index of purchasing managers. manufacturing and trade inventories, new
home sales, existing home sales, building permits, housing starts, the house
price index. construction spending, mortgage rates, the money stock, crude oil
prices, the noufarm payroll employment. the unemployment insurance claims,
the Federal funds rate. the ten year treasury yield. the S85? 500 index, the
Dow Jones index. the Nasdaq, the trade weighted exchange index, and other
indicators that will be discussed in class. You will use these data to forecast
the economic conditions in the United States in the third and fourth quarters of
2015. In addition, you will explain the impact of the adopted monetary policy
and fiscal policy on the economy. In your forecast. you will describe how the
economy is expected to perform. This is based on the information available in
2014 and 2015, and your knowledge about policy decisions. You need to use your
understanding of macroeconomic theory to explain and support your forecast.
The first section of the report will include a forecast of gross domestic prod-
uct. This section will include a forecast of the components of national income
including consumption spending, investment spending, government spending,
and net exports. The second section will include a forecast of inflation, core in~
flation, energy prices, and food prices. The third section will include a forecast
of unemployment. and imderemployment. The fourth section will include a fore-
cast of asset prices. The fifth section will include a discussion on your prediction
of the business cycle. Another section will discuss the conduct of monetary and
fiscal policy and their implications on the economy. A final section will forecast
the value of the currency. The report will also include a conclusion.
Your grade will depend on the sufficient and appropriate use of data and
indicators. Your grade will also depend on the ability to link economic theory
and intuition to the analysis.
