Auto Industry Term Paper - 2200 Words

Auto Industry: Macroeconomic Considerations Before Business Expansion (Term Paper Sample) Content: Auto industry: Macroeconomic considerations before business expansion.Studentà ¢Ã¢â€š ¬s NameInstitutionCourseIntroductionThe auto industry is an important industry, in the past it has contributed about 3 to 3.5 percent to the overall GDP (Gross Domestic Product). The auto industry employs people engaged in engineering, designing, manufacturing, parts and components manufacturing and sell and service of vehicles. The industry is also a huge consumer of services and goods from other sectors (Ballew Schnorbus, 1994). According to a report by the federal Bureau of Labor Statistics in October 2010, the number of people employed in auto and parts manufacturing as well as dealerships was more than 3.3 million. The auto industry faced tough times during the period between 2008 and 2010, the period was characterized by extremely tight credit has made it impossible for companies and consumers to make investments. Many manufacturers, suppliers and dealerships were fighting f or survival in the industry.In the past two decades the auto industry has seen a transformation with the domestic assembly plants have slowly losing their market share in United States to international firms like Honda, Toyota and Hyundai. By the end of 2009 the market share of the three main domestic auto manufacturers was just below 4.2 perc(U.S Department of commerce: bureau of economic analysis 2010).Macro economic analysis of the Auto industryThe health of the economy is crucial for the health of the auto industry. Monetary policy and fiscal policy set the tone for the economy. Low interest rates make car more affordable, meaning more people are able to purchase cars and subsequently increased demand. The effect is more auto jobs. If interest rates are high, the demand decreases and auto jobs are fewer. This decreases the taxes paid by the industry and increases unemployment insurance payouts, both of which affect fiscal policy (Helmut, 1994).Throughout history the auto indust ry is characterized by its production rates cycling through different business phases. When the industry is experiencing expansion the economy at that time is usually stable the auto vehicles manufacturers and parts manufacturers are able to invest more capital to meet the increased demand. This time of expansion also contributes to increased employment in the industry. At peak of the expansion stage the demand becomes higher than the economyà ¢Ã¢â€š ¬s ability to supply, product and labor shortages are usually evident. On the other hand when the economy is experiencing a decrease in real GDP the auto industry undergoes a period of contraction and recession. Firms in the industry start facing decreased profits, unwanted inventories, postponed investment and the need to lay off employees. The cycle is repeated because when the interest rates are lower again and the GDP improves the consumers begin to satisfy their pent-up demand that they were holding during the recession. A recover y of the auto industry business cycle only occurs when the business activity and GDP returns to its previous peak.The performance of any industry is dependent on interest rates. Consumers are more willing to borrow to satisfy their current needs when the interest rates are low. Businesses are also more willing to borrow in order to invest towards the growth of the company when interest rates are low. Increased interest rates results in decline in production rates and real GDP.Over the years it can be noted that the peaks and troughs in the auto industryà ¢Ã¢â€š ¬s production rates occurs during the peak and troughs of the economyà ¢Ã¢â€š ¬s real GDP. In USA the auto industry contributes about three percent of the economyà ¢Ã¢â€š ¬s GDP however the influence it makes towards economic change is about forty percent. This shows that durable goods are affected by and also affect the economic activity of a country.Other factors affecting the auto industry are the unemployment rates and inflation rates. There is a direct relationship between unemployment and inflation. Higher rates of unemployment correlate with lower rates of inflation. Increased unemployment reduces the ability to buy especially non essential goods like automobiles. Unemployment imposes many costs to society (Shedlock, 2010). When the auto sales are positive the employment rates in the industry also increase, the vice versa is also true. Technological advances have also reduced the amount of people the industry can employ at any given time.Current Macroeconomic situationDuring the economic downturn businesses had to reduce inventories and slash pay rolls as a result of severe liquidity crisis and deleveraging of the financial markets. The reduction in spending and reduced demand for goods and services was accelerated by frozen credit markets. This resulted to further layoffs and further increase in recession. Today, the economic situation in United States of America is improving.ÂThe GDP is rising and the economic data shows a positive trend. There has been a noticeable and sustainable improvement in the labor market. From the second half of 2013, Real GDP growth has been increasing to a more three percent annual rate.The unemployment rate has reduced, with on average180, 000 new jobs a month being created over the past six months. Indicators of the improving labor market are that workersà ¢Ã¢â€š ¬ perception of job availability has improved and the increased willingness of workers to quit the current job. The Auto Industry auto manufactures and parts manufactures now employs 826,000 workers, in the past four years more than 173,000 jobs according to U.S federal jobs report 2013. Although these figures are still below the 1.1million workers employed in the industry before the recession it is still a vital positive change.The accommodative monetary and fiscal policies are the two most important factors that have led to the improved economy. In the past few years when the economy was dragging the fiscal policy at the time was the cause. The fiscal policy was compounded by uncertainty, making people less willing and more cautious to make new commitments. People stopped spending on other things but necessities. This situation was further compounded by the increase in tax. The increased uncertainty caused by the fiscal policy resulted in an increase in unemployment rate by 1.25 percent translating to two million lost jobs as at late 2012 according to economists at Federal Reserve Bank of San Francisco (Leduc and Zheng, 2013). In December 2013 the Federal Reserve laid out a clear monetary policy that led to increased consumer confidence and reduced uncertainty.The U.S economy is still operating below capacity since the GDP is still low and the unemployment rate still high relative to its potential. The global economic situation has made the US dollar to appreciate and the import prices to be low (Gordon, 2013). The economic struggle of other countri es characterized by downward pressure on inflation is holding down the import price inflation in the United States. Even though there was economic improved in the United States in 2013 the import prices fell by over one percent. There is hope however that the foreign markets will strengthen and the downward pressure from import prices will reduce. If this happens then the inflation will come up to the targeted two percent over the next few years.The monetary policy needs to remain accommodative since there is still high unemployment and low inflation. The federal funds rate is the primary conventional policy too which serves as a benchmark for short term market interest rates. Since December 2008 the fund rates have been lowered to near zero as the recession and financial crisis intensified. The government started providing forward guidance about the future trajectory fed funds rate in order to ensure lowered fund rates translated into longer term interest rates (Potter, 2013). Sin ce late 2008 there has been a large scale asset purchase program. The latest round of this started in September 2012, where there was a eighty five billion purchase of combined long term Treasury and Mortgage backed securities each month at its peak. In December 2012 FOMC meeting, they outlined their plans to keep funds rate at zero lower bound. These plans are until the unemployment rate reduces to 6.5 percent (Board of Governors of the Federal Reserve System, 2013)Post Recession DemographicsThe recession period reshaped the automobile industry over the past few years. The auto industry is faced with a new post recession mindset of consumers, demographic ships and how auto manufacturers respond to these changes. What the consumers are expecting from the manufacturers may have changed. The recession, according to Jim Farley the Executive Vice President of Global Marketing, Sales and Services of Ford at the 2013 New York International Auto Show, has changed how consumers make purc hase decisions and hat they look for in motor vehicles.Luxury vehicles for example are no longer being defined by exclusivity, size and price rather people are associating luxury with performance, quality and features. In a survey for example sixty percent of the respondents expected a luxury car to cost about sixty thousand far less than the former expected one hundred luxury vehicle price tag. There is also a significant shift in the market with women, Hispanics and Millennials transforming the market. The most powerful trend is the global increasing consumer power of women. Women are trading agricultural work with businesses and professions drawing women into cities all over the world. In United States women are outpacing men. The Hispanic householdsà ¢Ã¢â€š ¬ net worth has increased over the years, Hispanics have a known reputation of buying luxury vehicles at a faster rate than the overall market.The greatest demogr...

The Argument Against The Mass Amnesty Of The Millions Of...

THE CASE AGAINST AMNESTY 2 Abstract Within the confines of this essay lies the argument against the mass amnesty of the millions of illegal immigrants. This conclusion came to fruition through the use of the many sources at the disposal of anybody who can use a database. The topics that will be touched upon will include the evidence regarding the diversion of tax money and the amount of tax revenue that would be returned to the United States by the newly welcomed migrants, the costs of educating their children, the influx of crime caused by these individuals, a review of constitutional law and the ways in which it is involved, and a surprising, yet humanitarian angle to the side against amnesty regarding the methods of detainment used by the current centers that are in place and the inhumane treatment contained within those walls. A fair but firm criticism of the opposition will be taken as the major points behind their argument are systematically taken apart and discussed in length, yet, near the end, those points wil l be shown in a light that will not validate, but show these points to noble in their aim and explain why these points, while noble, are incapable of producing the results that the opposition would like to obtain. Keywords: Immigration, Reform, Illegal Immigrants. THE CASE AGAINST AMNESTYShow MoreRelatedLegalization For Hard Working Immigrants890 Words   |  4 Pagessparked various arguments between Americans. No agreement has been reached regarding immigration reform, possibly because many people view it as an immediate amnesty rather than a possibility of legalization for hard-working immigrants. Despite of the negative meaning associated with it, an immigration reform would be beneficial to the U.S. in social aspects, such as having undivided families, and by stimulating economic growth. 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The French and Indian War Essay - 823 Words

The French and Indian War was a conflict in North America in which Great Britain fought France and their Native American allies. It lasted from 1756 until 1763, so it was also known as the Seven Years War. At the peace conference in 1763, the British received Canada from France and Florida from Spain, but permitted France to keep its West Indian sugar islands and gave Louisiana to Spain. The treaty strengthened the American colonies significantly by removing their European rivals to the north and south and opening the Mississippi Valley to westward expansion. The war began as disputes over land between British colonists, officials, and the Iroquois Confederacy who were against the French and their Native American allies. The Iroquois†¦show more content†¦In July 1758, the British won their first major victory at Louisbourg, near the mouth of the St. Lawrence River. Within a month, they took Fort Frontenac at the western end of the river. Then they arrived at Quebec, where G eneral James Wolfe won another important victory in the Plains of Abraham in September 1759. However, both he and the French commander, the Marquis de Montcalm, died soon after the battle. When the British captured Montreal in September 1760, the French lost their last foothold in Canada. Soon, Spain decided to help France fight against England, and throughout the rest of the war Britain focused on capturing French and Spanish territories in other places throughout the world. The cost of funding the war was so massive that the ensuing debt nearly destroyed the British government. This debt caused most of the grievances between the British and the colonists, eventually leading to the Revolutionary War. This resource loss had a massive impact on Britain. The outcome of the war never truly made up for the resources the British had to use to win, so they had to find another way to make up for the lost funds. This was achieved by taxing the colonies on many types of goods. The first thing Britain wanted to do was stop illegal smuggling. They attempted to do this through the Sugar Act. The Sugar Act, created by George Grenville, actually lowered the tax onShow MoreRelatedThe French And Indian War1095 Words   |  5 PagesThe French and India war was a war that took place in today’s Pittsburgh. The war was both caused by the English and French. The English and the French both felt that they were entitled to land and each was to willing to fight and they were also, willing to go into war so they could prove that they owned the land. 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Catch 22 Essay College Thesis Example For Students

Catch 22 Essay College Thesis I would have to say that Joseph Hellers Catch-22, was at least enjoyable to read. There were several aspects about it that made it good and bad at the same time. First, I think the most important thing aspect to look at, is that Heller makes death, a traditionally sickening topic, a humorous event. It is humorous because of the way he illustrates who is crazy. I assumed that Yossarian was the insane one in the beginning. Now, I cant say that I am sure. I like how this book makes the reader think. Who really is crazy Does anyone know Yossarian is doing anything he needs to, to survive. Does that make him insane In my eyes, e is living on instincts, the way he should. The threat of death keeps him going. He is not insane. So who is insane, the reader, the writer I dont feel that I can answer that. If anything, I think all of the above. It is neat to see how one would act when faced with death. I think what Heller was trying to say is that when someone knows they are dying, nothing makes sense to them. When we see people that know they are dying, we think that they dont make sense. So, we cant really know who is making sense. Its very tricky in that way. This at least kept me awake and thinking while reading it. I think the ain conflict of the story, was between humanity and the rules. We are forced to do something by law then we pay the ultimate price for it. The best part is that we do it all for the idea that we are protecting those laws. The idea of a Catch-22 is interesting. Its like saying, A person has the right to do anything that another person cannot stop them from doing. This catch appears throughout the entire book. It was quite evident when the Italian woman is talking about the Military Police. It is also clearly evident when Yossarian is walking down the stairs. He is cursing Catch-22, although he doesnt believe n it. There is no real explanation for Catch-22, thats the catch. It can only be defined as Catch-22. When Yossarian discusses with Colonels Cathcart and Korn, it is easy to see the Catch-22. This situation shows that a Catch-22 causes a person to betray all the values that they have. All this time, Ive been trying to explain what I feel about the book, when I dont know how I feel. This Catch-22 is so strange that my thoughts about it keep changing as I type, changing the way I feel about the book as a whole. Its very odd. I liked the book, but the ideas in it are so marveling that Im not sure what to think. How Heller wrote this impresses me. His use of the Character Yossarian causes the reader to examine oneself, and also examine the idea of insanity. Overall, Id have to say that this book is definitely good to read, but my feelings are still questionable. I hate to see a book such as this go to waste in the end, lie so many others. There is no reason for it to end this way. It just shows a lack of imagination. There is no sense of individuality in the books ending. IT was simply bad guy dies and loses. There is nothing that is different from any other form of book All of the above stated things are true.