Output and Growth and of the Countries - Essay Example

?ECO202 - CA Compare the four countries in terms of Output and Growth (Real GDP). The analysis should only cover the period from the beginning of 2008 to the present, and make sure the most recent 2010 changes are addressed. 2. Compare the four countries in terms of Productivity (Output Per Worker). The analysis should only cover the period from the beginning of 2008 to the present, and make sure the most recent 2010 changes are addressed. 3. Compare the four countries with respect to Inflation and Prices (CPI). The analysis should only cover the period from the beginning of 2008 to the present, and make sure the most recent 2010 changes are addressed. 4. Compare the four countries regarding the Labor Market (Unemployment Rate). The analysis should only cover the period from the beginning of 2008 to the present, and make sure the most recent 2010 changes are addressed. This is a difficult part because instead of reporting and ranking the indicators you must look at them as a whole, in an analytic manner to arrive at conclusions: 5. After reviewing the recent economic indicators for these countries, which is the country that currently has the strongest economic recovery at the present time. Make certain you confine your choice to only one country. 6. What is your prediction about the economic health of the United States over the next 3 to 5 year period? Please confine your comments only to the US economy. The purpose of this paper is to provide an examination and analysis on economic indicators pertaining to United States, Japan, Canada, and the United Kingdom. The format that this paper will utilize is to answer the six questions that this paper outlined on the title page through analyzing the nations and then providing insight into the grand picture. 1) The purpose of this question is to provide a comparison of four countries based on output and growth (Real GDP) from the period of 2008 to the present. Real GDP closely matches standard gross domestic product trends however this measure takes into consideration the effect of inflation and deflation. One of the most interesting nations was Canada, insofar as the nation enjoyed a higher rate of Real GDP growth during the periods of approximately 93-95, 98-01, 2002, 2004 and 2006, the nation also seemed to experience the shortest amount of time with the lowest growth. On the other side of the spectrum it could be argued that Japan spent the most amount of time as the lowest performer of the pack of nations, by being at the overall average lowest and reaching the most extreme negative points. Moreover the United Kingdom and the United States both seemed to spend the majority of the time somewhere in the middle (Never spending much time as the highest performer and lowest performers respectively). What can be stated that is that the economic downturn of the 2008-2010 season held a devastating effect on all of the nations with arguably Japan being the most strongly affected and Canada was left performing the best of all the nations. It should also be noted that Japan rebounded to the highest levels of all the nations but this seems to represent an over rebound and the nation has been quickly plummeting over the past year. 2) The purpose of this question is to examine the productivity (Output per worker) of the four nations. Upon early examination it is clear that all the nations seem to follow the same pattern, insofar as when there seems to be a significant tradeoff between which nation seems to hold the highest position. Every single nation held this position at least a few times, and what could be concluded from this is that no one nation seemed to have any sort of competitive advantage over another. However it is also the case that Japan recognized the most significant drop during the economic downturn. What this could arguably translate to is the idea that Japanese industries were more exposed to the effects of a significant depression. It could be that the industries that employed the most people in Japan produced goods or provided services that would typically fall out of favor during a recession. 3) With respect to inflation and prices which is a measure of the change in the price of a basket of goods it becomes apparent that Japan held the lowest price index for the greatest amount of time. At a cursory glance it appears as though the United States held the highest consumer price index for the most amount of time, although since the recession that position has been held by Great Britain. What this translates to is that arguably Japan has been hit hardest by the recession which has lowered demand and kept prices for a basket of goods down. On the flip side it could also be argued that The United States has been enjoying a higher rate of economic growth which has kept demand for goods high and as such prices have been growing year over year for a basket of goods. All nations recognized a serious decline during the 2008 period in which the world experienced an economic downturn (Which translated to a decline in the demand for many goods and services). Some controversy exists around this metric insofar as it may be the case that not all nations will be examining the same basket of goods. 4) The purpose of this question is to compare the four countries regarding the Labor Market (The Unemployment Rate). Interestingly, Canada held the highest level of unemployment for nearly the entire period up until 2008, from a high of 11% to a low of 6% at the beginning of 2008. The nation with the next highest level of unemployment was Great Britain which held the 2nd highest level of unemployment until approximately 2001 in which the national unemployment level was surpassed by both Japan and the United States. Japan remained consistently at the lowest level for the vast majority of the seventeen year span. After the economic downturn the United States recognized the highest spike in unemployment followed by Canada, Great Britain and Japan. What this may signify would be the vulnerability of the national employment sectors. The United States may have suffered heavily because of a collapse in the housing sector which hurt building jobs. Canada may have suffered in the commodities sectors (Oil, metals, coal, timber etc) as other nations scaled back their purchases. Great Britain may have suffered after collapses in their banking sectors however Japan may have remained stable because of heavy government subsidies to banking sectors. 5.) After reviewing all of the economic indicators for the various countries it is my opinion that overall Canada is the country that is going to experience the greatest economic recovery. Firstly in regards to real gross domestic products Canada has more or less been in the top position and during & after the recession remained at the highest level out of all the nations. Although Canada has the lowest output per worker after the recession it was also the nation that needed to rebound the least (Insofar as the nation was relatively inelastic), moreover all the other nations rose to an artificially high level and are currently plummeting to a more realistic level. Canada has the second highest consumer price index which I interpret means that the nation is recognizing a realistic level of growth and would be less likely to experience wild swings in the price of goods. Finally, in regards to the unemployment rate Canada had at one point experienced the highest level of unemployment yet in the wake of the economic downturn now recognizes the second lowest level of unemployment (albeit only marginally). From this perspective I believe overall the country is experiencing the most realistic and strong economic recovery after the economic downturn. 6) Overall my prediction of the economic health of the United States over the next three to five years is mixed. From one perspective, the economic indicators that we have just viewed do not paint an overly positive picture for the future of the United States. The nation currently has the highest unemployment level, the second lowest consumer price index, and somewhere between the 2nd and 3rd level of Real GDP. However the nation also has a high output per worker. Moreover the nation has a diversified economy based on manufacturing, technology, industrial products, as well as primary resources (Oil, Gas, Coal, Precious metals etc). Moreover the United States has a large number of very high performing companies such as Apple, General Electric, Halliburton etc. each of which keep a great deal of their operations based in the United States. Overall the indicators were not painting an excellent picture but I believe that taking into consideration these entire additional factor inputs that the United States will be performing at a better level than what the data is showing. References Federal Reserve Bank of St. Louis (2011) International Economic Trends. (online) Available at http://research.stlouisfed.org/publications/iet/ Accessed on May 9th 2011. Bureau Of Labor Statistics. (2011) Consumer Price Index: Frequently Asked Questions. (online) Available at http://www.bls.gov/cpi/cpifaq.htm Accessed on May 9th 2011. Read More