Macro Measures and the U.S. Auto Industry

This paper assesses the probable effects on the automobile manufacturing industry in the United States of projected trends in six macroeconomic measures applicable to the economy of the United States. The (a) six macroeconomic measures, (b) projected trends in these measures, and (c) probable effects of these projected trends on the automobile manufacturing industry in the United States are as follows:

Real GDP: Real GDP is nominal GDP adjusted for price-level changes (inflation). Real GDP is calculated in relation to a base year. GDP typically is measured in terms of rate of change for purposes of analysis.

Projected 18-month trend: The projected change over the 18-month period ending 30 September 2006 is an increase of 4.84 percent, which reflects an average annual growth rate approximating 3.2 percent.

Probable effects on the automobile manufacturing industry in the United States: The projected rate of growth in Real GDP is sufficient to allow new automobile sales in the United States to maintain existing trends. The existing growth trends, however, are modest at best. The projected growth in Real GDP is not sufficient, however, to lead to a substantial market expansion that would allow the automobile manufacturing industry in the United States to overcome (a) poor product decisions – e.g., focusing new model development on high energy consumption vehicles, (b) poor quality perceptions by consumers, and (c) loss of competitive advantage to Japanese automobile manufacturers.

Unemployment Rate: The unemployment rate reflects the percentage of the non-institutionalized workforce that is considered to be officially unemployed at a specified time.

Projected 18-month trend: The projection over the 18-month period ending 30 September 2006 is that the official Unemployment Rate will remain virtually stable at approximately 5.3 percent.

Probable effects on the automobile manufacturing industry in the United States…

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