american business
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American Business. Leslie Lum Bellevue College. Icebreaker. Brainstorming. Brainstorming is a group technique to generate as many ideas as possible. We are going to brainstorm in groups about: What is a business? What is the context of a business? What environment does it operate in? - PowerPoint PPT PresentationTRANSCRIPT
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American Business
Leslie Lum
Bellevue College
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Icebreaker
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Brainstorming
• Brainstorming is a group technique to generate as many ideas as possible. We are going to brainstorm in groups about: What is a business?
• What is the context of a business? What environment does it operate in?
• Form a group
– Brainstorm what a business is
– Draw a picture of your ideas
– Report back to the class
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What is the economy?
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Part of the U.S. economy?
• Building a house in New Mexico
• Toyota cars assembled in Kentucky
• Hair salon in South Dakota
• Seattle SuperSonics
• Coca Cola plant in China
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Who wants to be a millionaire--
http://www.worldbank.org/data/quickreference/quickref.html
What is the size of the US economy?
How does it compare to the rest of the world?
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Relative GDP (Nominal vs PPP)(wikipedia.com)
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GDP per capita (person)(wikipedia.com)
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Year Current Dollars (B) 1996 Dollars (B)1991 5,986.2 6,676.41992 6,318.9 6,880.01993 6,642.3 7,062.61994 7,054.3 7,347.71995 7,400.5 7,543.81996 7,813.2 7,813.21997 8,318.4 8,159.51998 8,781.5 8,508.91999 9,274.3 8,859.02000 9,824.6 9,191.42001 10,082.2 9,214.52002 10,446.2 9,439.9
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Measuring the economy
GDP Growth Rate (1990s)
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
GDP in billions of
current dollars
GDP in billions of chained
1996 dollars Growth1990 5,803.2 6,707.91991 5,986.2 6,676.4 -0.47%1992 6,318.9 6,880.0 3.05%1993 6,642.3 7,062.6 2.65%1994 7,054.3 7,347.7 4.04%1995 7,400.5 7,543.8 2.67%1996 7,813.2 7,813.2 3.57%1997 8,318.4 8,159.5 4.43%1998 8,781.5 8,508.9 4.28%1999 9,268.6 8,856.5 4.09%2000 9,872.9 9,224.0 4.15%
GDP adjusted for inflation.
Growth is graphed.
Value of goods and servicesare totaled.
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The rate of change of GDP
• Growth• Period of Expansion
• Contraction• Recession
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REAL GDP
http://www.whitehouse.gov/fsbr/esbr.html
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Change in Real GDP
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Inflation
• Increase in the price of goods and services
• How do we measure it?
• Is it good or bad?
• What has been the inflation rate for the past 30 years?
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What consumers spend
http://nytimes.com/interactive/2008/05/03/business/20080403_SPENDING_GRAPHIC.html
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Consumer Price Index
CPI1986 109.61987 113.61988 118.31989 1241990 130.7
1991 136.21992 140.31993 144.51994 148.21995 152.4
1996 156.91997 160.51998 1631999 166.62000 172.2
2001 177.12002 179.9
http://www.bls.gov/cpi/home.htm#tables
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Inflation
CPI DEC-DEC AVERAGE1986 109.6 1.1 1.91987 113.6 4.4 3.61988 118.3 4.4 4.11989 124 4.6 4.81990 130.7 6.1 5.4
1991 136.2 3.1 4.21992 140.3 2.9 31993 144.5 2.7 31994 148.2 2.7 2.61995 152.4 2.5 2.8
1996 156.9 3.3 31997 160.5 1.7 2.31998 163 1.6 1.61999 166.6 2.7 2.22000 172.2 3.4 3.4
2001 177.1 1.6 2.82002 179.9 2.4 1.6
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Inflation
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How does the US compare?
http://www.nationmaster.com/graph-T/eco_inf_rat_con_pri
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Inflation Up - Interest Rates Up
0%
2%
4%
6%
8%
10%
12%
14%
16%19
71
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
Inflation
T-Bill Return
Source: Bureau of Economic Affairs and Global Financial Data
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Inflation Up - Economy Down Inflation Down - Economy Up
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
Real GDP Growth
Inflation
Source: Bureau of Economic Affairs, U.S. Government
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Growth in the EconomyReal GDP Growth - Chained 1996 Dollars
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
Source: Bureau of Economic Affairs, U.S. Government
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Role of Government
• Monetary Policy - Federal Reserve sets interest rates
• Fiscal Policy - Spending to stimulate economy
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Can the Government afford to help?
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Can the Government afford to help?
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Monetary Policy - How it works
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The Whole Picture
• The Business Cycle is crucial to business planning
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How to avoid finding yourself in the middle of a recession
• Important to look ahead
• Predict upturns and downturns
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Economic indicators
• Construction
• Manufacturers’ shipments, inventories, orders
• Employment
• Consumer credit
• Wholesale trade
• Capacity
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GDP Output by Industry
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Not all industries are growing or contracting at the same rate
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Shifts in the American Economy
• Where should you be?
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Key terms to analyze and know (as on test)
• Economy
• GDP, Real GDP growth
• GDP per capita
• Inflation (Consumer Price Index)
• Business Cycle (expansion, contraction, peak, trough)
• GDP output by industry
• Economic indicators