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April 24, 2020

EC-202-01

Article Title: IMF: Global economy will suffer worst year since Depression

Article Link: https://apnews.com/8f170d4aae2073c692d0fa40da6abcf4

Summary: This article recounts on how the world economy in 2020 will suffer its worst year since the Great Depression of the 1930’s, according to the International Monetary Fund. The IMF said that it expects the global economy to shrink 3% this year- far worse than its 0.1% dip in the Great Recession year of 2009-before rebounding in 2021 with 5.8% growth. It acknowledges, though, that prospects for a rebound next year are clouded by uncertainty. The cumulative loss to the global gross domestic product could amount to $9 trillion – more than the economies of Germany and Japan combined. In its latest outlook, the IMF expects economic contractions this year of 5.9% in the United States, 7.5% in the 19 European countries that share the euro currency, 5.2% in Japan and 6.5% in the United Kingdom. China, where the pandemic originated, is expected to eke out 1.2% growth this year.

Reflection: This article directly relates to the previous assignment and topic that we discussed in class, The World Bank and the International Monetary Fund. The international Monetary Fund (IMF) is an organization of 189 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. Created in 1945, the IMF is governed by and accountable to the 189 countries that make up its near-global membership. The IMF’s primary purpose is to ensure the stability of the international monetary system-the system of exchange rates and international payments that enables countries (and their citizens) to transact with each other.

Citation:

·      Wiseman, Paul. “IMF: Global Economy Will Suffer Worst Year since Depression.” AP NEWS. Associated Press, April 14, 2020. https://apnews.com/8f170d4aae2073c692d0fa40da6abcf4.

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April 16, 2020

EC-202-01

Article Title: World Bank president warns the global coronavirus recession will hurt poorer countries the most

Article Link: https://www.cnbc.com/2020/04/15/world-bank-president-david-malpass-recession-to-hurt-poor-countries-most.html

Summary: This article recounts on how the coronavirus pandemic may set back economic growth efforts in developing nations. The World bank President says that further progress can be made on access to electricity, clean water and sanitation and that the big worry is that we’re moving backwards because of the global recession. The Covid-19 outbreak has had devastating impacts on the global economy as the disease spread around the world after it originated late last year in China. The audience can see through the eyes of the several contributors of this article that supply chains have been disrupted, and tens of millions of workers have lost their jobs or had their hours reduced as governments implemented restrictions on economies to minimize transmissions.

Reflection: This article directly relates to the topic of focus this week in class, the global economy in the time of the COVID-19 Pandemic. As a result of the pandemic, the world will likely experience its worst recession since the Great Depression, according to the International Monetary Fund. This is a huge problem. The world recession will be deep and that especially impacts poorer countries. The World Bank in early April approved a $1.9 billion funding program for developing countries to help support their response to COVID-19. It also approved billions of dollars for coronavirus aid in early March.

Citation:

·      kevin_stank. “World Bank President Warns the Global Coronavirus Recession Will Hurt Poorer Countries the Most.” CNBC. CNBC, April 15, 2020. https://www.cnbc.com/2020/04/15/world-bank-president-david-malpass-recession-to-hurt-poor-countries-most.html.

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April 12, 2020

EC-202-01

Article Title: Coronavirus response must include bold fiscal policy

Article Link: https://thehill.com/opinion/finance/488920-coronavirus-response-must-include-bold-fiscal-policy

Summary: This article recounts on how the economic damage Americans experience resulting from the COVID-19 pandemic could be severe, with a fa sharper downturn than a typical recession. This is a public health crisis, but it is rapidly becoming an economic one as well. Financial markets are showing extreme distress; early reports of unemployment insurance claims suggest they are spiking in ways consistent with rapidly rising unemployment and job loss. Millions of workers are experiencing reduced income whether through hours reductions, furloughs or layoffs, which will in turn put further downward pressure on spending.

Reflection: This article directly relates to chapter 21 of the textbook,” The Influence of Monetary and Fiscal Policy on Aggregate Demand. When the government alters spending or taxes, the resulting shift in aggregate demand can be larger or smaller than the fiscal change: The multiplier effect tends to amplify the effects of fiscal policy on aggregate demand. The crowding-out effect tends to dampen the effects of fiscal policy on aggregate demand. This article does a good job displaying that to the audience. Economists disagree about how actively policymakers should try to stabilize the economy. Some argue that the government should use fiscal and monetary policy to combat destabilizing fluctuations in output and employment. Others argue that policy will end up destabilizing the economy because policies work with long lags.

Citation:

·      Shambaugh, Jay. “Coronavirus Response Must Include Bold Fiscal Policy,” March 23, 2020. https://thehill.com/opinion/finance/488920-coronavirus-response-must-include-bold-fiscal-policy.

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April 3, 2020

EC-202-01

Article Title: Oil Is Spiking but No Long-Term Solution to the Supply and Demand Problem Is in Sight

Article Link: https://www.barrons.com/articles/oil-spikes-supply-demand-saudi-arabia-russia-opec-51583848303

Summary: This article recounts how oil prices rebounded recently after crude had its worst slide since 1991. Investors are hoping that a U.S. government stimulus plan will boost the economy and overall demand – and perhaps even aid travel companies that are some of the largest oil users. Brent crude jumped 11% to $37.08 in early trading and West Texas Intermediate was up 7.9% to $33.60. That still leaves prices at levels where drilling burns more cash than it produces. But oil is climbing back toward breakeven levels for U.S. producers, several of whose stocks rose substantially in early trading.

Reflection: This article directly relates to chapter 20 in the textbook, which discusses supply and demand. Short-run fluctuations in GDP and other macroeconomic quantities are irregular and unpredictable. Recessions are periods of falling real GDP and rising unemployment. This article does a good job representing this concept. Economists analyze fluctuations using the model of aggregate demand and aggregate supply. The long – run aggregate supply curve is vertical because changes in the price level do not affect output in the long run. In the long run, output is determined by labor, capital, natural resources, and technology; changes in any of these will shift the long-run aggregate supply curve.

Citation:

·      Salzman, Avi. “Oil Is Spiking but No Long-Term Solution to the Supply and Demand Problem Is in Sight.” Oil Spikes but No Long-Term Solution to the Supply-Demand Problem Is in Sight - Barron's. Barrons, March 10, 2020. https://www.barrons.com/articles/oil-spikes-supply-demand-saudi-arabia-russia-opec-51583848303.

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March 28, 2020

EC-202-01

Article Title: U.S. consumer spending rose, inflation was moderate in February

Article Link: https://www.cnbc.com/2020/03/27/us-personal-income-february-2020.html

Summary: This article recounts on how U.S. consumer spending rose moderately in February and momentum is set to fade rapidly in the coming months. Consumer spending increased 0.2% last month as households spent more on electricity and gas, offsetting decreases in outlays on motor vehicles and parts as well as recreational goods. Personal income 0.6%, boosted by higher wages and government payments to farmers caught in the 20-month long U.S. – China trade war. The highly contagious virus, which causes a respiratory illness called COVID-19, is wreaking havoc on the economy, prompting the Federal Reserve to take extraordinary measures and the U.S. Congress to assemble a record $2 trillion stimulus. Economists say the economy is already in recession.

Reflection: This article directly relates to inflation, which is what chapter 17 in the textbook discusses. To explain inflation in the long run, economists use the quantity theory of money. According to this theory, the price level depends on the quantity of money, and the inflation rate depends on the money growth rate. The chapter also discusses how the inflation tax is the loss in the real value of people’s money holdings when the government causes inflation by printing money. The costs of inflation include menu costs, shoe leather costs, confusion and inconvenience, distortions in relative prices and the allocation of resources, tax distortions, and arbitrary redistributions of wealth. The article clearly shows the Macroeconomic concept of inflation.

Citation:

·      “US Consumer Spending Rose, Inflation Was Moderate in February.” CNBC. CNBC, March 27, 2020. https://www.cnbc.com/2020/03/27/us-personal-income-february-2020.html.

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March 22, 2020

EC-202-01

Article Title: Coronavirus impact: Once pandemic ends, businesses may take 6 months to get up and running normally, says CFO survey

Article Link: https://www.cnbc.com/2020/03/23/coronavirus-and-markets-business-wont-be-back-to-normal-for-months.html

Summary: This article recounts on how the most important immediate supply chain task in the U.S. is health-care supply to reduce the load of coronavirus cases on hospitals. Companies including GM and Tesla are among the manufacturers working on ventilators to deal with shortages. Apple and Facebook are among the firms donating protective masks. Key global logistics companies, including Boeing and all of the major airlines that transport cargo, are under extreme financial stress with implications for their global supply ecosystems. China factories are coming back online, but nowhere near 100%. The audience can see through the eyes of the author that the biggest task facing the world right now is stopping the spread of the coronavirus. But even when the global public health crisis is under control and global supply chain disruptions caused by COVID-19 end, many large companies expect that business will not return to normal for between three to six months.

Reflection: This article directly relates to all the macroeconomic concepts that we have discussed up to date. One of those concepts being importing and exporting. All around the world, particularly in the U.S., companies are being affected because they have less people to load and unload trucks. Everyone is having issues with getting product to the stores. So short term, outbound is a big issue. Inventory levels are out of whack due to hoarding, disrupting the supply chain, while shipping and transport industries are taking a hit due to people who work in warehouses or trucking now out of work due to illness or quarantine.

Citation:

·      Barbara Booth, Eric Rosenbaum. “Coronavirus Impact: Once Pandemic Ends, Businesses May Take 6 Months to Get up and Running Normally, Says CFO Survey.” CNBC. CNBC, March 23, 2020. https://www.cnbc.com/2020/03/23/coronavirus-and-markets-business-wont-be-back-to-normal-for-months.html.

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March 17, 2020

EC-202-01

Article Title: Coronavirus Lesson: Balance Sheets Matter

Article Link: https://www.fool.com/investing/2020/03/18/coronavirus-lesson-balance-sheets-matter.aspx

Summary: This article recounts on how when everything’s going great, investors care about growth. Earnings growth, sales growth, cash flow growth. Little attention is paid to the balance sheet. Companies aren’t rewarded by the stock market for being conservative, keeping debt in check, and piling up cash for a rainy day. The audience can see through the eyes of the author that the coronavirus crisis is going to drive some companies into bankruptcy. That’s a given. Companies that have spent the past decade using debt to fuel share buybacks are going to face a day of reckoning. For investors, the most important thing is to make sure the companies you have in your portfolio are capable of surviving a brutal recession.

Reflection: This article directly relates to the concept of the balance sheet, discussed in chapter 16. A balance sheet is a financial statement that summarizes a company’s assets, liabilities and shareholders’ equity at a specific point in time. Leverage also ties to the balance sheet. Leverage is the use of borrowed funds to supplement existing funds for investment purposes. A leverage ratio is the ratio of assets to bank capital. Because banks are highly leveraged, a small change in the value of a bank’s assets causes a large change in bank capital. To protect depositors from bank insolvency, regulators impose minimum capital requirements.

Citation:

·      Green, Timothy. “Coronavirus Lesson: Balance Sheets Matter.” The Motley Fool. The Motley Fool, March 18, 2020. https://www.fool.com/investing/2020/03/18/coronavirus-lesson-balance-sheets-matter.aspx.

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March 10, 2020

EC-202-01

Article Title: Coronavirus: Here is who’s hiring right now as unemployment skyrockets

Article Link: https://www.daytondailynews.com/business/economy/coronavirus-here-who-hiring-right-now-unemployment-skyrockets/8hBrNjroB4dUq7jrRddpzI/

Summary: This article recounts on how the past week has been full of news about businesses closing or reducing staff and hours because of coronavirus orders, but local job analysts say other companies are still hiring. The audience can see through the eyes of the author what thousands of local workers are deciding what to do after restaurants, bars, fitness centers, nail salons, and other businesses closed or cut back. More than 100,000 Ohioans filed for unemployment compensation with some looking for new jobs now, others hoping to wait out a stoppage if it only lasts a couple of weeks, and all of them watching to see if the federal government goes through with sending checks to every American.

Reflection: This article directly relates to the chapter that we’re covering this week, unemployment. The textbook discusses how the unemployment rate is not a perfect indicator of joblessness or the health of the labor market since it excludes discouraged workers and doesn’t distinguish between full – time and part – time work, or people working part time because full – time jobs not available. Some people misreport their work status in the BLS survey. The article clearly shows the macroeconomic concept of unemployment. Despite the issues with what the unemployment rate measures, it is still a very useful barometer of the labor market & economy. The coronavirus is a perfect example of fluctuation in the unemployment rate.

Citation:

·      Kelley, Jeremy P. “Coronavirus: Here Is Who's Hiring Right Now as Unemployment Skyrockets.” daytondailynews. Staff Writer, March 20, 2020. https://www.daytondailynews.com/business/economy/coronavirus-here-who-hiring-right-now-unemployment-skyrockets/8hBrNjroB4dUq7jrRddpzI/.

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Feb. 25, 2020

EC-202-01

Article Title: Financial markets drop again on coronavirus fears

Article Link: https://www.bbc.com/news/business-51624003

Summary: This article recounts on how financial markets plunged again recently as investors continue to worry about the spread of the coronavirus. Airlines and travel companies, as well as firms that rely on China as part of their supply chain, were again among the most affected. Oil prices also dropped. Losses on US markets accelerated after US health officials warned that the public should expect cases to spread. The director of the national center for immunization and respiratory diseases is asking that the American public to prepare for the expectation that this might be bad.

Reflection: This article directly relates to concepts that we learned in chapter 13, specifically financial markets. According to the textbook, a financial market is an institution through which savers can directly provide funds to borrowers. Examples of this that are discussed in the textbook are stocks and bonds, which is a certificate of indebtedness. A stock is a claim to partial ownership in a firm. The article clearly shows the Macroeconomic concept of a financial market. Like many other markets, financial markets are governed by the forces of supply and demand. Markets are usually a good way to organize economic activity. Financial markets also help allocate the economy’s scarce resources to their most efficient uses. Financial markets also link the present to the future: they enable savers to convert current income into future purchasing power, and borrowers to acquire capital to produce good and services in the future.

Citation:

·      “Financial Markets Drop Again on Coronavirus Fears.” BBC News. BBC, February 25, 2020. https://www.bbc.com/news/business-51624003.

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Feb 18, 2020

EC-202-01

Article Title: Singapore plans biggest budget deficit in years to meet virus threat

Article Link: https://www.reuters.com/article/us-singapore-economy-budget/singapore-plans-biggest-budget-deficit-in-years-to-meet-virus-threat-idUSKBN20C0P2

Summary: This article recounts the announcement that Singapore made, $4.5 billion in financial packages to help contain the coronavirus outbreak in the city-state and weather its economic impact, paving the way for its biggest budget deficit in at least 15 years. The audience can see through the audience of the author that the wealthy city-state, one of the countries outside China hit hardest by the virus, has already cut its economic growth outlook this year and flagged the possibility of entering recession.

Reflection: This article directly relates to one of the topics in the textbook in chapter 13, and that is budget deficit. The textbook defines a budget deficit as a shortfall of tax revenue from gov’t spending. A government budget deficit is negative public saving, so it reduces national saving, the supply of funds available to finance investment. When a budget deficit crowds out investment, it reduces the growth of productivity and GDP. The article clearly shows the Macroeconomic concept of GDP, investment, and budget deficit. The article does a great job providing the audience with numbers to be able to justify the statements made.

Citation:

·      Geddie, John. “Singapore Plans Biggest Budget Deficit in Years to Meet Virus Threat.” Reuters. Thomson Reuters, February 18, 2020. https://www.reuters.com/article/us-singapore-economy-budget/singapore-plans-biggest-budget-deficit-in-years-to-meet-virus-threat-idUSKBN20C0P2.

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Feb. 11, 2020

EC-202-01

Article Title: Productivity is Key to Thailand’s Growth and Prosperity, says World Bank

Article Link: https://www.thailand-business-news.com/economics/77633-productivity-is-key-to-thailands-growth-and-prosperity-says-world-bank.html

Summary: This article recounts on how the Thai economy is projected to pick up moderately to 2.7 percent in 2020 as private consumption recovers and investment picks up due to the implementation of large public infrastructure projects. According to the article, Thailand’s growth slowed to an estimated 2.5 percent in 2019 from 4.1 percent in 2018, due to external and domestic factors. The audience can see through the eyes of the publisher that as Thailand seeks to transition to high-income status by 2037, boosting productivity and reviving private investment will be critical.

Reflection: This article directly relates to chapter 12 of the textbook. Productivity and investment are two out of various topics discussed in chapter 12 and the article. As we learned through the textbook and in class, one of the ten principles from chapter 1 is “A country’s standard of living depends on its ability to produce.” When a nation’s workers are very productive, real GDP is large and incomes are high. The article also discusses how boosting productivity requires investment and since resources are scarce, producing more capital requires producing fewer consumption goods. Reducing consumption also increases saving. The article clearly shows the macroeconomic concept of productivity and investment.

Citation:

·      World Bank. “Productivity Is Key to Thailand's Growth and Prosperity, Says World Bank.” Thailand Business News, January 17, 2020. https://www.thailand-business-news.com/economics/77633-productivity-is-key-to-thailands-growth-and-prosperity-says-world-bank.html.

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Feb. 4, 2020

EC-202-01

Article Title: U.S. consumer prices gain slightly; underlying inflation tame

Article Link: https://www.cnbc.com/2020/01/14/us-consumer-price-index-cpi-december-2019.html

Summary: This article recounts on how U.S. consumer prices rose slightly in December and monthly underlying inflation pressures retreated. This data could potentially allow the Federal Reserve to keep interest rates unchanged through this year. The labor department made a statement saying that the consumer price index increased 0.2% last month after climbing 0.3% in November, even as households paid more for health care. The article also discusses how the declines in the costs of used cars and trucks caused underlying inflation to be held back.

Reflection: This article directly relates to Chapter 11 in the textbook, titled “Measure the Cost of Living” which covers what the consumer price index is, how it’s calculated, the issues that come with CPI, the variables for inflation, and other topics of that nature. The article clearly shows the Macroeconomic concept of CPI and provides necessary evidence. We learned in class that CPI is a measure of the cost of living and how it tracks the cost of the typical consumer’s “basket” of goods & services. This correlates to the article as well because the article discusses those topics, along with how CPI is used to make cost of living adjustments and to correct economic variables for the effects of inflation.

Citation:

·      “US Consumer Prices Gain Slightly; Underlying Inflation Tame.” CNBC. CNBC, January 14, 2020. https://www.cnbc.com/2020/01/14/us-consumer-price-index-cpi-december-2019.html.

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Jan. 28, 2020

EC-202-01

Article Title: A leading macroeconomic indicators’ based framework to automatically generate tactical sales forecasts

Article Link: https://www.sciencedirect.com/science/article/pii/S0360835219306382.

Summary: This article recounts a proposal for an automatic framework that automatically selects macroeconomic indicators for a tactical sales timeframe that is based on techniques that are known to improve accuracy but have not been combined for tactical sales forecasting so far. The framework this article proposes consists of decomposing the sales using STL decomposition and predicting each component separately. The article suggests to predict the seasonal pattern using another method and the macroeconomic trend using a LASSO regression model.

Reflection: This article directly relates to regression models, which we haven’t covered yet in class. The data in the article suggests that STL decomposition on the macroeconomic variables was tested but found no evidence of improved accuracy. The researchers suggest to use the unprocessed macro-economic data in the prediction framework. The article focuses on selecting macroeconomic variables to predict the extracted (long-term) trend of sales. The researchers suspect that performance could be improved by adding non-macroeconomic variables to the study and believe the impact on the selection of the macroeconomic variables is limited.

Citation:

·      Verstraete, Gylian, El-Houssaine Aghezzaf, and Bram Desmet. “A Leading Macroeconomic Indicators' Based Framework to Automatically Generate Tactical Sales Forecasts.” Computers & Industrial Engineering. Pergamon, November 13, 2019. https://www.sciencedirect.com/science/article/pii/S0360835219306382.

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Jan. 24, 2020

EC-202-01

Article Title: Macroeconomic Indicators for Electrical Consumption Demand Model in Malaysia

Article Link: https://www.econjournals.com/index.php/ijeep/article/view/8139/4738.

Summary: This article recounts the determinants of electricity consumption demand both in the long-run and short-run periods based on ARDL Bounds co-integration approach using samples derived from the year 1970 up until 2016. The audience can see through the eyes of the several contributors of this article on how the test of level relationship revealed that GDP, degree of urbanization, FD, and INF in the economy can be treated as the “long-run forcing” variables that explain domestic electricity demand in Malaysia.

Reflection: This article directly relates to the first course learning outcome, as stated in the syllabus, “Upon completion of this course, students will be able to know and analyze GDP, its components, and real and nominal differences.” The article clearly shows the Macroeconomic concept of GDP, which is one of the concepts mentioned in the textbook in chapter 10. The article provides data tables and graphs that I’m not familiar with, although they will most likely be brought up at some point in class during the semester. The article also discusses “short term” and “long term” plans. Based on the contents of the article, there seems to be a need for Malaysia’s policymakers to devise viable and effective short- and long-term plans for sustainable energy. This course will most likely cover those terms.

Citation:

·      Ridzuan, Abdul Rahim, Mahirah Kamaluddin, Asmat Ismail, Mohamad Idham Md Razak, and Nazatul Faizah Haron. “Macroeconomic Indicators for Electrical Consumption Demand Model in Malaysia.” International Journal of Energy Economics and Policy, November 2019. https://www.econjournals.com/index.php/ijeep/article/view/8139/4738.