Posts Tagged ‘macroeconomic’
As the two nominees still lay in deadlock on the on-going election, many are eagerly waiting for the results. According to the latest news, Obama is gaining advantage on winning the election but the key states results are yet to announced. Some polling states are still open and there may be some delays especially on the states where Sandy struck the most. For the meantime, I thinks better to contemplate on the “what ifs” of this election.
What if Romney wins?
An indeed a successful businessman, no one can doubt Mitt Romney’s capability as a businessman. He was donned with the business knowledge and skills from the prestigious Harvard University and has proven his worth in the corporate world through his Bain Capital.
But many are in doubt to whether he can put his business theories into reality. Moreover, certain individuals are also pessimistic in the application of his business theories into political arena. It seems that he has invested more effort in this campaign rather than in his experience on managing the state of Massachusetts, warding an impression of a less experienced political candidate than his competitor.
If in case he is elected, he have to deal with a congress, divided by difference in ideals unlike his business group, which may really give him a hard time. Also, being a less experience candidate may have its toll once he won the seat. Unlike Obama who already handled the rein in the past four years, Mitt Romney will start from the scratch in governing the most influential and most powerful country in the world. The health care programs of Obama will most probably terminated and the Bush cut tax for the wealthy may be made permanent according to some. He also must be prepared to face the issue about Iran’s nuclear material.
What if Obama wins?
Some of his supporters may have been waned off this past few years but most still have their faith on the first African-American president. Obama talks about the withdrawal of troops in Afghanistan and building educational program. But the plans may be hindered by the budget. After winning the election, the health care plans will probably push through and so are the pressing concern over Iran’s nuclear materials. Similar to Romney’s case. He has plenty of issues to handle if he would regain that White House seat of his.
In my opinion, I think its better if Obama wins. The experience and agenda are really two important factors to this election. But I hope that it won’t hurt much if the new kid in the block will be given the chance to steer the wheel.
Unemployment rate is the percentage of the labor force who doesn’t have a job but are willing and actively seeking work. It is one of the macroeconomic indicators that most fundamental analyst are observing in case of a long term investment decision and is usually published at 8:30 EST (NY) on the 1st Friday of the month.
The unemployment rate is calculated by dividing the number of unemployed individuals by all individuals currently in the labor force.
Effects of Unemployment in the Society and Economy:
Instead of spending their time, effort, and resources in performing a job, the unemployed part of the labor force are obligated to drain their efforts first in seeking out new jobs. The individual’s counter-productiveness may even worsen if the hunt will turn out to be a failed attempt.
Impoverishment leading to social unrest
Idle individuals have lesser financial means to dispose thus allocating most of it only on the “needs” in order to survive. In the the long run, this may result to dissatisfaction which may escalate once certain individuals started to fill-in their “wants” through dishonest means. The dishonest means which is used to gratify the “wants” may then lead to unrest in the public.
Exploitation of labor
Since there is a surplus of workers because everyone is seeking out a job, there is a high tendency that laborers will be exploited. Most company will take an advantage on this situation since laborers are forced to accept what is offered to them because of fear to lose their job. The exploitation may be in different forms like lower wages, fewer to none benefits, unpaid overtime pay, longer working hours, etc.
Less People Pay Taxes
An individual without any source of income cannot pay his dues to the government. Only those that are employed have the capability to pay the taxes and no tax is certainly a “no no” to the government. Without taxes, the economic activity will slow down because taxes is like a fuel that keeps the economy running.
Bankruptcy of Businesses
Unemployed individuals spends only for things that they needed to survive. The decrease of purchasing activity of consumers will certainly cut those companies that manufactures products that are not essential in the day-to-day activities of individuals.
Different goods and services are bought and sold by different countries all over the world. The products and services that are produced outside the country brought inside a country are called Import. Furthermore, the products and services produced inside a country and shipped outside a country are called Export.
Import transactions are done through a non-resident selling the goods to a resident which will then forward it to the locals. For example, a foreigner will sells a basket of apple to a local which will in turn sell it to local market. Meanwhile, Export transactions are done when a local sells goods and services to a foreigner. The rate of import and export affects the growth of a country’s economy.
In the Fundamental analysis, those macroeconomic indicators are regarded as the Import and Export prices. Import and Export prices are released on the 10th day of every month at 8:30 EST (NY) which will have an impact on the key growth expectation. If there’s a increase in the export then the US dollar rate will increase. But if the import increases then the rate will decrease.
Moreover, It is attributed to the income and expense of a country. If the income surpasses the expense then a surplus may arise. But if the expense outweighs the income then a deficit will probably occur.
Though Import and Export prices only has a little influence on the market, it is needed for a long term economic analysis. Traders that are trading in long positions in Forex may need to regard this index.
Money supply is basically the total amount of currency circulating in an economy at a specific time. It involves issued paper money, coins, and other liquid instruments such as funds on checking and savings accounts in the bank.
The value of Money supply is an important macroeconomic indicator because it may impact the economy through price level of goods and services, inflation, and the business cycle. The government or the central bank releases the information annually.
Analyst from both public and private sector carefully monitors it because of its possible effect on the economy. It is controlled through policies, born from careful analysis of economists, regarding interest rates and increase or decrease of the volume of money currently circulating the economy.
The increase of supply most probably lowers the interest rates thus attracting investments, generating jobs in the process, that would most probably land on the hands of the consumers. The more money in the hands of a consumer, the greater the urge to spend. Businesses would then react to this by increasing the rate of production which would walk hand-in-hand with the increase in the demand of labor.
The types of money and its value on the Money supply are categorized in “M”s:
M0 – is the total cash resource circulating the country.
M1 – All the tangible money, such as coins and currency, and the most liquid resources such as demand deposit and traveler’s cheques. M0 + checkable deposits.
M2 – The combination of the previous type and all time-related deposits; savings deposits, and non-institutional money-market funds. M1 + time deposits ( less than $100,000) and other highly liquid savings.
M3 – The broadest measurement of the money. It includes M2 plus time deposits exceeding $100,000, institutional money-market funds, short-terms repurchase agreements, and other larger liquid assets. M2 + large time deposits and deposits above $100,000.
M4 – the sum of all the preceding types.
The degree of importance of these indicators vary from country to country. There are countries like the United States that pay more attention to M2 while M3 outweighs the other types in most European countries. The Great Britain gives more significance to M4.