Macroeconomics came to exist when modern governments collected and disseminated economic statistics. In order to explain fluctuations in output and production, it is useful for corporations to know what the economy’s overall level of output and production is (Lieberman, 2002). With knowledge about the economy as a whole, macroeconomic forecasts can help individual firms make microeconomic decisions. The following paragraphs will discuss several macroeconomic forecasts created by different institutions discuss terminology of economic data and its implications to N. County ADHC- a local health care center in Mira Mesa.
Forecasts under evaluation were obtained from Carmetrics, The Ministry of Economy, The Economic Resource Bureau, RREEF Research, Census Bureau and the San Diego Regional Economic Corporation. Significant data contained in the text included GDP, growth rate, employment and unemployment, inflation and economic growth. Some of the differences among these forecasts included the differences in data analysis that individual agencies choose to evaluate. For instance, the San Diego Regional Economic Corporation stressed population growth and divided its categories in terms of gender, age, jurisdiction and ethnic composition. The RREEF concentrated on U.S Retail market conditions and projected economic trends occurring in major U.S. cities. The most similar information came from Carmetrics, and the Ministry of the economy which both focused on the same categories such as GDP and the labor market which forecasts employment and unemployment. Although many of actual numerical values were different from each other, the figures appeared to be in agreement with regards to the direction the economy was headed towards.
A specific example was the increase of GDP from 2002 to 2003. Gross domestic product is “The total value of all final goods and services produced for the marketplace during a given year within the nation’s borders” (Lieberman, 2002). As GDP rises< it reflects that the economy standard of living rises. GDP is important to the goal of an adult day health care center because it can provide signals or clues about the economy’s future (p.360). It is a reflection of consumption of goods and services purchased by households and government agencies. Since one of the operational goals of HOPE ADHC is to expand its healthcare service to more patients, assessing a positive direction of GDP will provide clues that the center is also heading in the right direction.
A second economic indicator of the economy that was used in forecast analysis was unemployment. The forecasts showed a decline in unemployment rates. Lieberman explained that the opportunity cost of unemployment is lost output of the nation as a whole. One of HOPE ADHC’s goal is to hire more employees during its expansion plans in order to provide more healthcare service to local residents in the community. Due to lowered employment rates and fewer people available that are actively seeking work, the health care center may be forced to pay higher salaries to entice employees to switch from other companies to its own (p.361).
In addition, these annual economic forecasts included a projected increase in employment or civilian workforce. Lieberman also explains that an increase in employment can cause and increase in potential output due to and increase in labor supply. By having more people that want to work, economic growth will be stimulated and the average standard of living will rise when more output is generated and grows at a faster rate that population (p.408).
The population forcast generated by the Census Bureau is also significant to the planning goals of HOPD ADHC. The forecast provided useful information such as population segmentation by age and disposable income. Data reflects a rise in percentage population over the age of 50 and included income segmentation. This regional forecast can help encourage the firm’s decision on expansion plans by estimating the % of population over 50 that are likely to use the health care service.
A final statistic that can provide useful data for decision making include the forecast on the economy’s inflation rates. Economic forecasts projected a percentage increase in the price of goods and services by about .7%. This can also help HOPE ADHC to project estimates of its own costs of inputs and better estimate the costs of healthcare services in 2003 when it is available to service the market.
In conclusion, macroeconomic forecasts are useful tools that provide individual corporations with necessary data that can clue them in making important decisions. HOPE is an example of a company who uses macroeconomic concepts and activity to base many of its microeconomic decisions on. With the better understanding of the economy as a whole, businesses can project their own forecasts to fit their operational needs and goals.