Econ

Introduction

This paper will examine an eighteen month forecast of economic indicators and rationale for the forecast based on historic trends as reflected by the Dow Jones, and the? It will discuss how the GDP, unemployment, and inflation have affected our economy. These economic indicators have had a profound effect on the economy.

The thesis will begin by defining the economic indicators and providing a brief description of some graphs/charts of the Dow Jones, and we have to know where and when did each index started, what each index contains, and how it is viewed. This paper will start with the Dow Jones simply because it is probably the most heard about index of by the average person.

However, in economics, everything does not always work out as planned and there are always some shortcomings in the models economists use. This thesis will then expand on some of the possible downfalls. For instance, it will show that when certain indicators increase, then all three sections should also increase.

GDP: This is the total goods and services produced by worker and capital within the United States. If GDP is increasing it is a good sign that the economy is getting stronger and this will influence people to buy cars, houses, and other luxuries. Since the first quarter of 2003, the growth in GDP has been above 3% per quarter and this is boosting consumer and business confidence. Businesses are beginning to loosen their purse strings.

"The three sides of GDP interact to determine the aggregate. An increase of effective demand (consumption, investment, public expenditure, exports) will increase GDP, provided national producers can meet the quality/price requirements of buyers. If not, imports will grow instead. If national production cannot grow for physical reasons, firms producing already at full capacity probably will decide to raise prices, vanishing effective demand with inflation." (http://www.economicswebinstitute.org)