MANAGERIAL ECONOMICS AND GLOBALIZATION

Managerial Economics and Globalization

Managerial Economics and Globalization

Real GDP

Gross Domestic Product also known as GDP is used to identify economic health of a country. GDP is the sum from output of goods and services produced or provided within the United States borders. However, transactions that are considered underground transactions, for whatever reason are not reported to the government and are not a part of the numbers used to calculate real GDP. The total sum includes all that is produced and sold and is used not only by government, but investment brokers, and bankers in determining tax, interest rates, and investment opportunities. The measure of GDP is important as the measures are used to help better understand not only inflation but also employment.

According to U.S. Department of Commerce, Bureau of Economic Analysis, "The total output of goods and services produced by labour and property in the United States decreased at an annual rate of 5.7 percent in the first quarter of 2010” (para. 1). In the fourth quarter, real GDP decreased 6.3 percent. Motor vehicle output subtracted 1.36 percentage points from the first-quarter change in real GDP after subtracting 2.01 percentage points from the fourth-quarter change.

Unemployment

The current rate of total unemployment in the United States has risen to 9.4% in May of 2010, (BLS, 2010). This is an increase of 0.5% from the rate of 8.9% in April of 2010. In the state of California, the unemployment rate is at 11.5%, the highest rate since before World War II (Abate, 2009). The amount of people on unemployment in the automotive industry has seen a steady increase since December of 2009, when the economy first started to decline. Since 2009, the unemployment rate has increased from 4.6% in the United States (Bureau of Labour Statistics, 2009).

Over the past 10 years, the overall unemployment rate has been fluctuating. Starting in 1999, the unemployment rate for the nation was only 4.2% compared to the rate of 2.9% for the automotive industry in 2009, (Bureau of Labour Statistics, 2009). With the American car companies having financial trouble, thousands of people have lost jobs due to lack of sales causing a lesser need for manufacturing as many cars. Many people are now unemployed after working at the automotive plants in Michigan, partially attributing to the 14.1% unemployment rate that is seen there.

Inflation

Inflation Rate as measured by the Consumer Price Index

According to Colander (2008), “CPI measures the prices of a fixed basket of consumer goods, weighted according to each component's share of an average consumer's expenditures. The basket is then broken down into percentages of how much each of these goods has been consumed.

At the end of May, 2009 the current unadjusted CPI had increased .3 percent. During the previous 12 months the CPI had decreased 1.3 percent, which is the largest decrease since April, 1950, (BLS, 2009). The seasonally adjusted CPI-U (Consumer Price Index - Urban) “increased 0.1 percent in May after no change in April” (BLS, ...