Gdp Forecast

In: Business and Management

Submitted By jacoporossi
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Individual Project 1 1. Forecasting

(a) Economic Growth:
According to Bureau of Economic Analysis GDP increased by 2% in the first quarter of 2012 and by 1.3% in the second quarter. It is likely that this positive trend will be confirmed even in the 3rd quarter of this year. A possible estimate is the mean of the variations of GDP which occurred in the first two quarters of 2012. According to this reasoning GDP would increase by about 1.65% in the 3rd quarter.
In order to support this estimate we can look at several significant indexes. For instance we can consider the Consumer confidence (this index is aimed at predicting consumption patterns). The figure related to September was 70.3 compared to 61.3 of the previous month. Therefore an increase in private consumption could lead to an increase of GDP. The increase in private consumption is not unreasonable. The average annual expenditure per consumer rose by 3.3% in 2011, slightly outpacing the 3.2% increase in CPI which occurred from 2010 and 2011. This is the first real rise in private consumption after 2007. So we can reasonably expect an increase in consumption expenditure even in 2012.
Another meaningful index we can consider in our analysis is New home sales. The data for August was 373K compared to 374K of the previous month. So there is a slight downturn in purchased houses that could represent a reduced willingness to make investments. But at the same time I think that this decrease is too small to demonstrate a downward pattern in housing investment. In fact if we look at Housing Start we can see that the construction of 750,000 new houses started in August and only 733,000 new houses were started in July. At the same time the Case-Shiller 20-city index shows that house value is increasing over time. The last available data was +1.2% compared to 0.5% of the previous statistics.…...

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