Economic Indicators
Many economic indicators affect the success and failure of the automotive industry. Economic indicators reveal the direction that the economy is heading. In the examination of the automotive industry there are several indicators that have been affected thus showing the anticipated decline of the industry. Some of the major economic indicators that may affect the automotive industry are unemployment rate, inflation rate, gas and fuel prices, and producer price index. These economic indicators provide a summary of past trends and an overview of what consumers and business alike can expect ahead.
Unemployment
Unemployment rate is the percentage of workers in the United States that is unemployed. The calculation is derived by dividing the number of unemployed individuals by the total number of unemployed and employed individuals. The unemployment rate sharply increased to 5.8% in December of 2001 from 5.6% from the previous month (White, 2002). This came at the end of the year after nearly 2 million jobs lost their jobs. Since January 2001, the unemployment rate rose by 1.6%.
Inflation
Inflation is defined as the “sustained of continuous rise in the general price level, or alternately, the sustained or continuous fall in the value of money” (Makinen, 2003). The consumer price index, or CPI, commonly referred to, measures the change in retail prices. Because labor costs make up a significant amount of total production costs, the increased rate of production is often perceived as a clear indication of retail inflation in the future. Causes of inflation range from the change in price to the change in the supply of money.
Over the years, the rate of inflation has shifted significantly. During the early 1990’s the inflation ...