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Consumer Products Inc.

Consumer Products Inc. André A. Marks Applied Managerial Economics ECON616-1101B-04 Phase 1 Individual Project Instructor: Edmund Keim February 18, 2011. Objectives.

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Consumer Products Inc.

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  1. Consumer Products Inc. • André A. Marks • Applied Managerial Economics • ECON616-1101B-04 • Phase 1 Individual Project • Instructor: Edmund Keim • February 18, 2011

  2. Objectives • To examine the current state of the US economy by focusing on the Gross Domestic Product (GDP), unemployment, inflation, and interest rates • To discuss the economic and political landscape of Brazil, Germany and Japan • To compare and contrast the US economy with Brazil, Germany, and Japan

  3. The US Economy • The GDP of the US • The United States of America has the largest economy in the world with a GDP of over $14.2 trillion dollars. Even tough we have been in a recession, we have had three consecutive quarters of growth (TradingEconomics.com, 2011). • Consumer confidence and spending increased 4.4% in the forth quarter compared to 2.4% in the third quarter (Bureau of Economic Analysis, 2011). • Government spending was down and real residential fixed investment increased 3.4 percent (Bureau of Economic Analysis, 2011). • Exports were up in the fourth quarter contributing to the GDP growth trend. Source: TradingEconomics.com

  4. The US Economy • The unemployment rate in the US • The unemployment rate in the United States is very high. • As of January 2011, the unemployment rate in the US was 9%. • The average unemployment rate is around 5.5%. • At 9%, millions of Americans are unemployed. Source: TradingEconomics.com

  5. The US Economy • Interest Rates • The Federal Fund interest rate in the United States have been at a all time low of 25 percent. • From 1971 until 2010 the United States' average interest rate was 6.45 percent reaching an historical high of 20.00 percent in March of 1980 and a record low of 0.25 percent in December of 2008 (Trading Economics.com, n.d.). • The interest rate has been at .25% for the last two years in an effort to help stimulate growth in the US economy. Source: TradingEconomics.com

  6. The US Economy • Inflation • Inflation occurs when the price of goods and services change. Typically, when the inflation rate increases, purchasing power decreases. The dollar is worth less after the consumer price index (CPI) and the Producer price index (PPI) increases. • In the US, “the annual rate of inflation has fluctuated greatly over the last half century, ranging from nearly zero inflation to 23% inflation, the Fed actively tries to maintain a specific rate of inflation, which is usually 2-3% but can vary depending on circumstances” (Investorword.com, n.d.). • In the last 13 months the inflation rate has ranged from 2.63% to 1.14% and is currently at 1.5%. The average inflation rate in 2010 was 1.64%. (InflationData.com, n.d.). 1.5% 1.14% Source: InflationData.com

  7. The political landscape and economic climate … • Brazil • Brazil is an emerging country experiencing a tremendous amount of growth. The economy grew 8% last year, and many expect Brazil, the worlds 8th largest economy, to overtake Italy and become the world’s 7th largest economy this year (Solar, 2010). • Strong consumer demand and investment made Brazil’s economy a shinning star in in the developed world • It is a democratic nation whose economic policies under president Lula and the current ruling party has “brought millions of people out of poverty” (Lopez, 2010). • Brazil has a nominal GDP of $1.5 billion U.S. dollars (Solar, 2010). Brazil

  8. The political landscape and economic climate… • Germany • The dismantling of the Berlin Wall on November 9, 1989 gave birth to a reunified Germany on October 3, 1990, and the first all Germany election took place. In December of the following year. • “Germany is a highly industrialized and urbanized country with the largest economy in Europe. Its major exports are construction machinery, vehicles, chemicals, iron and steel, textiles, fuels, and precision and optical equipment. Per capita gross domestic product (GDP) was estimated at US $26,200 in 2001. In 2002, the euro became the country's sole currency, replacing the deutsche mark (DM)” (Encyclopedia of the Nations, n.d.). • Germany has a population of 81,879,976 people (World Bank, 2011). Germany

  9. The political landscape and economic climate… • Japan • The political landscape in Japan changed when the Liberal Democratic Party loss it parliamentary majority in the 1993… • In Japan, the government plays an active role in guiding economic development to create growth in its economy. • The Japanese economy is the third largest in the world, behind China and the United States with a GDP of $5,068 billion US dollars. • The forecast for Japans economy is partly cloudy. In spite of it being one of the fastest growing major economies in 2010, it suffers from deflation so monetary policy cannot be use to stimulate the Japanese economy (EIU Global Forecasting, 2011). • The, yen, the Japanese currency, has strengthened by 15% against the US dollar placing Japanese exports, which are vital to its growth, at a disadvantage. Japan

  10. Compare and Contrast… • The GDP in the US with Japan, Germany, and Brazil • The economic output of the United States is much greater than the economic output of Japan, Germany, and Brazil. It is the largest economy in the world. • The value of all goods and service produced in America is over 14 trillion dollars, compared to Japans $5,068 billion U.S. dollars, Germany’s $3,347 billion U.S. dollars, and Brazil’s $1,552 billion U.S. dollars. It is more than the other three countries combined. • The GDP formula is consumption (C) + government spending (G) + investments (I) + exports minus imports (X – I). Source: TradingEconomics.com

  11. Compare and Contrast… • Unemployment in the U.S. with Japan, Germany, and Brazil • The unemployment rate in the United States is very high • “The labor force is defined as the number of people employed plus the number unemployed but seeking work” (TradingEconomics.com). • Currently, millions of Americans are unemployed. • As of January 2010, the unemployment rate in the U.S. was 9%. Source: TradingEconomics.com

  12. Compare and Contrast… • Interest Rates in the U.S. with Japan, Germany, and Brazil • The benchmark interest rate of 0.25 percent in the US is below its 6.45 percent average for a reason… • Japans benchmark interest rate is at 0.00 percent, and the country is limited from a monetary policy standpoint to do anything to stimulate its economy because of deflation. • Germany’s benchmark interest rate is currently at 1.00 percent. • Brazil’s benchmark interest rate is was last reported at 11.25 percent, which relatively speaking, is good for Brazil whose average interest rate has been 17.22 percent. Source: TradingEconomics.com

  13. Compare and Contrast… • The Inflation Rate in the U.S. with Japan, Germany, and Brazil • The Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. • Currently it is 1.60 percent in the US • It is zero percent in Japan • 1.9 percent in Germany • The 5.99 percent interest rate in Brazil is far below the 30 year average of 445.98 percent Source: TradingEconomics.com

  14. Conclusion • We live in a global economy were the political and economic landscape of one nation can have a positive or negative affect on another. • Economies today are so integrated with one another that business executives and decision makers should not only focus domestically but abroad when it comes to growth, expansion, and securing a bright and prosperous future for their companies. • In order for Consumer Products Inc.’s growth to continue, we must explore expanding beyond our regional area to other parts of the country and abroad to increase our competitiveness, and profits. Money is cheap today. Let’s use it to grow our business now.

  15. References • BankRate.com. (2011). 11 key economic terms defined. Retrieved February 18, 2011 from http://www.bankrate.com/finance/federal-reserve/11-key-economic-terms-defined-1.aspx • Bureau of Economic Analysis. (2011). National income and products account GDP, 4th quarter and annual 2010. Retrieved February 14, 2011 from http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm • EIU Global Forecasting Service. (2011). Japan’s policymakers are moving to support the recovery. Retrieved February 15, 2011 from http://gfs.eiu.com/ • Encyclopedia of Nations. (n.d.). Brazil – politics, government, and taxation. Retrieved on February 18, 2011 from http://www.nationsencyclopedia.com/economies/Americas/Brazil-POLITICS-GOVERNMENT-AND-TAXATION.html • Encyclopedia of Nations. (n.d.). Germany – political background. Retrieved on February 18, 2011 from http://www.nationsencyclopedia.com/World-Leaders-2003/Germany-POLITICAL-BACKGROUND.html • Encyclopedia of Nations. (n.d.). Germany. Retrieved on February 18, 2011 from http://www.nationsencyclopedia.com/World-Leaders-2003/Germany.html • Encyclopedia of Nations. (n.d.). Germany – Domestic Trade. Retrieved on February 18, 2011 from http://www.nationsencyclopedia.com/Europe/Germany-DOMESTIC-TRADE.html

  16. References continued… • InflationData.com. (n.d.). Current inflation. Retrieved on February 15, 2011 from http://inflationdata.com/inflation/inflation_rate/currentinflation.asp • Investopedia. (n.d.). Federal Funds Rate. Retrieved on February 14, 2011 from http://www.investopedia.com/terms/f/federalfundsrate.asp • InvestorWords.com. (n.d.). Inflation. Retrieved on February 14, 2011 from http://www.investorwords.com/2452/inflation.html • Keim, E. (2011, February 16). Course materials retrieved February 16, 2011 from CTUO, Virtual Campus, ECON616-1101B-04: Applied Managerial Economics. Phase 1 Macroeconomic metrics and microeconomic basis for corporate expansion. Course materials: http://campus.ctuonline.edu • Lopaz, L. (2010). Brazil’s economy barely slows as investment surges. Retrieved on February 15, 2011 from http://www.foxbusiness.com/markets/2010/09/03/brazils-economy-barely-slows-investment-surges/print • National Export Initiative. (2010). The 2010 state of the union address. Retrieved February 14, 2011 from http://trade.gov/nei/ • Solar, I. I. (2010). Economist: Brazil may become seventh largest economy in 2011. Retrieved February 15, 2011 from http://www.digitaljournal.com/print/article/296338 • Trading Economics. (2011). United States growth rate. Retrieved February 14, 2011 from http://www.tradingeconomics.com/Economics/GDP-Growth.aspx?Symbol=USD

  17. References continued… • Trading Economics. (2011). United States unemployment rate. Retrieved February 14, 2011 from http://www.tradingeconomics.com/Economics/Unemployment-Rate.aspx?Symbol=USD • Trading Economics. (2011). United Statesinterest rates. Retrieved February 14, 2011 from http://www.tradingeconomics.com/Economics/Interest-Rate.aspx?Symbol=USD • World Bank. (2011). Brazils population. Retrieved February 18, 2011 from http://www.google.com/publicdata?ds=wb-wdi&met=sp_pop_totl&idim=country:BRA&dl=en&hl=en&q=brazil's+population • World Bank. (2011). Japans population. Retrieved February 18, 2011 from http://data.worldbank.org/country/japan

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