An Economic Downturn
The term paper for Economics 5 is a projection for the next two years on how the economy will do, with an emphasis on the first year. This is a normal activity for macroeconomists because of the direct impact changes in the economy will have on businesses. Some may prosper in an economic downturn, such as the 99+ Cent Store or Dollar Tree. Others, such as Walmart, will be affected be not overly. Most of the products sold are necessary items, and Walmart sells them for a modest price. However, the impact for higher-end stores, from Kohls to the Texas Roadhouse, will find the going much tougher. New businesses, or recently expanded businesses, will also generally suffer.
For this paper, the student should look to other projections, examine the trends in leading indicators and all other data that may seem relevant.
At times, such as the CoVid-19 pandemic, a major crises or event may intervene. In those cases, the student has the option to choose a focus that directly addresses the circumstances. The paper must still provide the projection, but emphasis can be placed on the effects of the situation.
Traditionally, this research includes looking a a wide variety of economic indicators and assessing whether they generally indicate economic growth, or lack of it. Leading indicators in particular are important. These include, for example, orders for durable goods, new housing starts (or applications for a permit to start building a house) and orders by retailers for retail goods. Unemployment, inflation and changes in GDP are generally more lagging indicators, the results of economic changes rather than indicators of future changes. They may also be very important because they may improve/worsen circumstances, or indicate the possibility of governmental actions that could affect the economy.
Currently, however, we have a wild card in the deck. The recovery from CoVid-19, including the inflation, is trumping all else in its effects on the economy. As a consequence, a strong focus on this one variable will be essential for this paper.
How to approach this project.
1. Look at the projects available on the internet to see what others are suggesting.
2. Choose indicators that appear particularly relevant at this time.
3. Look to current data sources for how these are being affected.
4. Search for existing forecasts on the internet, including the Congressional Budget Office. You must do your own forecast, but economists don’t reinvent the wheel for every assignment. They look for hints from other experts. Just remember to provide documentation (APA).
4. Look to peer-reviewed literature for expertise, as well as from current reputable economic sources, e.g., the Wall Street Journal, the Economist and business pages of New York Times and Washington Post.
This is a eight-page paper with ten references. See the syllabus for more information.
