A Comprehensive Forecast for a New Startup Business

Introduction

Forecasting enables economists and professional analysts to estimate future economic conditions based on economic indicators. Economic indicators are data that show changes ahead in the economy. These indicators help forecast the direction of the economy. Forecasting is necessary and significant in a start-up business with the current changing business environment. It is a vital tool that can help an organization establish long-term growth. Creating a detailed forecast for a start-up business can assist managers to plan for future performance adequately. It helps identify trends within the manufacturing industry as well as customer behavior in creating high sales. A business should adjust with the constant changing markets, for a company to adapt; its management needs to predict what might happen in the market. Accuracy in making forecast assist in establishing proper plans for thriving in the business sector and avoiding potential risks and downfall. Utilizing time horizon forecasting is an excellent way for a business to learn possible patterns by identifying specific data that occurs within a particular time series. The goal of this paper is to discuss the economic indicators, which are unemployment, the stock market, consumer income, GDP and interest rates as well as give insights of the resources used to gather financial data and economic forecast data. The paper highlights these relevant economic indicators and provides a complete forecast for a new automobile manufacturing company.

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Discussion

Economists use historical data in identifying patterns and trends, showing increases and decreases in sales volumes in-between periods. In reviewing historical data, economists can forecast from the understanding of patterns, leading to predictions of future product sales and demands. There are numerous useful and valuable resources available for gathering historical economic data and economic forecast data used for financial forecasting.

Stock Market

People are reluctant before jumping into the stock exchange as well as purchasing stocks in the auto sector. An excellent resource for gathering economic data to help forecast future possibilities and learn from the past is by following the stock markets. The stock market will not tell the public how or why prices are the way they are, they predict the price. In the stock exchange, there is an index volume. How macroeconomics studies the rates of the entire economy, the index volume shows all of the trades in that index. The index volume number indicates whether people are buying or selling; it is also an indication of how the economy is trending. If people are buying, stocks are going up, and the economy is thriving. If people are selling, stocks are going down, and the economy could use some stimulating. By watching the stock market, economists are getting a combination of both qualitative data and quantitative. There are a few stock exchanges in America for forecasting data: the NASDAQ, the NYSE, and the AMEX. Various companies within those three exchanges that contribute to their trends. The qualitative data comes from the dependability of this resource. The pattern of the stock market is an excellent resource for gathering economic data.

Gross Domestic Product (GDP)

The GDP is the measure of the total monetary value of all economic activities in a particular country within a specific period. It is computed by totaling the investments, consumption and government expenditure and subtracting the imports. The GDP reflects the well-being of the economy in society. Hence, it is vital for a company to consider the countries' GDP in making production decisions. Previous and current fluctuations in the Gross Domestic Product is essential when forecasting future demand in the manufacturing sector, especially for automobiles.

Interest Rates

Interest rates for mortgages, vehicles, credit cards, government bills, and corporate bonds have been continuously fluctuating throughout history. Interests rates assist in translating how savings are converted to investments that finally reflects into the spending stream. The Federal Reserve website is one source used to compare and analyze historical rates in the US from 1971. The site is best for quantitative forecasting because the percentages provided are historical results that researchers can use to forecast the future. Qualitative sources for forecasting interest rates are Forbes and Bankrate.com. Forbes and Bankrate.com provide expert opinions and predictions from the authors' analysis of the market. Interest rates are significant in analyzing the overall success of an auto company in the economy.

Consumer Income

Consumer Income is one of the main areas of aggregate income. It is combined with rents, profits, and interests to show the combined amount of revenue available in the country. The economy must have a stable income to support the output of the country. If people have money, then they will be able to consume, which in turn boost businesses capabilities to produce more, creating a stable supply and demand market. The website census.gov is the official census info for the U.S.; it shows breakdowns of what the median annual incomes are by individuals, families, households, by ethnicity, or even by region. This information is vital to the auto industry to understand when the country has had decreases in income in the past and understood the reasons, which can form the basis for production in the future.

Unemployment

Unemployment is a massive factor in economics and an important function. When there is a drastic change in the unemployment rate, the economy as a whole is considered, including the business cycles and overall growth. The natural rate of unemployment is the term used to give reference to the target rate of unemployment, which is currently around 5 percent. One of the resources for gathering historical economic data, as well as the economic forecast data is the U. S. Bureau of Labor Statistics (www.bls.gov). This source will provide the measured percentage of labor force that is unemployed throughout the years, beginning in 1900.

Consumer Price Index (CPI)

The consumer price index focuses on the total vital commodities and services demanded by the consumer in a particular country. It provides a measure of price change levels in a state and the level of income, which is essential in the automobile industry.

Expectations

Expectations in economics are the views or foreseen forecasts that people who make the decisions regarding future prices, income and taxes. It is essential in the automobile industry because of the significant effect on the current choices the company will make. The expectations are based on the history of the past and present to determine what the expectations will be in the future. Rationale expectations have the advantage of providing optimal expectations.

Conclusion

There are numerous resources to utilize in gathering historical and economic forecasting data. These sources are valuable as they provide various diverse means of data gathering and in measuring an economy. Furthermore, policymakers, business leaders, and all consumers utilize this data in planning and decision-making; therefore these sources have a direct influence on economic performance. The effect of expectations on future price levels is clear in hyperinflation that occurs when people rush to spend on items that they most need before prices rise.