Economic Indicators Paper - BUS ECON I

Essay by Pokrant0930University, Bachelor'sA-, January 2009

download word file, 5 pages 5.0

The United States home building industry is currently under great strain as a direct result of the staggering economy. This industry once reported substantial revenue figures and well-deserved profits, but is now reporting below average figures on the total amount of homes built, amount of homes purchased, and the industry's overall net income. In order to determine what the future holds for the home building industry, an economic forecast must be compared and contrasted for the prominent economic indicators. This paper will compare two different 18-month forecasts for six economic indicators, a reconciliation of the differences between forecasts, and a rationalization for which forecasts our team believes to be the most accurate within the home building industry.

Compare & Contrast Six Economic Indicators:Interest Rate: Interest rates on residential mortgages are influenced by longer-term trend changes of economic indicators and changes that occur monthly. Currently, mortgage interest rates are 5.5%. A comparison of two different forecasts show projected interest rates for the first quarter of 2009 at 5.2%

and 5.6%, with a difference in forecasts of .4%. Projected rates for the second quarter of 2010 are 6.2% and 5.8%. During the third quarter of 2009 both forecasts have the same rate of 5.9% (Financial Forecast Center, 2008 and U.S. Economic Outlook, 2008)Housing Starts: Housing Starts determine the number of privately owned new homes on which construction has been started in a given period. During October 2008, there was an adjusted annual rate of 708,000 for building permits for privately owned houses (U.S. Census, 2008). A comparison of two different housing starts forecast project for the first quarter of 2009 rates of 768,000 and 741,000, with a difference of 27,000. Projected rates for the second quarter of 2010 are 774,000 and 741,000, with a difference of 33,000 (Financial Forecast Center, 2008 and...