2. ®1999 South-Western College Publishing 1 Chapter 20 Market And Industry Analysis

3. ®1999 South-Western College Publishing 2 Gross Domestic Product (GDP) Most Widely UsedMost Widely Used Quarterly and Annually DataQuarterly and Annually Data Value of All Goods and ServicesValue of All Goods and Services Gross National Produce (GNP)Gross National Produce (GNP) ComponentsComponents

4. ®1999 South-Western College Publishing 3 Quarterly And Annual Data Advanced EstimatesAdvanced Estimates –Quarterly Preliminary EstimatesPreliminary Estimates Revised EstimatesRevised Estimates Benchmark RevisionsBenchmark Revisions –Past three years

5. ®1999 South-Western College Publishing 4 Reporting GDP Jan. Feb. Mar. Apr. May June July Quarter 1 Advanced Estimate Preliminary Estimate Revised Estimate Benchmark Revision

6. ®1999 South-Western College Publishing 5 Components Of GDP ConsumptionConsumption InvestmentInvestment Government SpendingGovernment Spending Net ExportsNet Exports GDPGDP InflationInflation

7. ®1999 South-Western College Publishing 6 Measuring Consumption 69% Car SalesCar Sales Retail SalesRetail Sales Personal Income/ExpendituresPersonal Income/Expenditures

8. ®1999 South-Western College Publishing 7 Measuring Investment 13% Housing Starts/Building PermitsHousing Starts/Building Permits Durable Goods OrdersDurable Goods Orders New Home SalesNew Home Sales Construction SpendingConstruction Spending Factory Orders/Business InventoriesFactory Orders/Business Inventories

9. ®1999 South-Western College Publishing 8 Measuring Government SpendingMeasuring Government Spending –19% –Public construction Measuring Net ExportsMeasuring Net Exports –-0.5% –Merchandise trade balance Measuring InflationMeasuring Inflation –Producer price index –Consumer price index

10. ®1999 South-Western College Publishing 9 Measuring GDP 100% Purchasing Managers’ IndexPurchasing Managers’ Index EmploymentEmployment Industrial Production CapacityIndustrial Production Capacity

11. ®1999 South-Western College Publishing 10 Business Cycle TroughTrough –Low point PeakPeak –High point ExpansionExpansion –Before a peak ContractionContraction –After a peak

12. ®1999 South-Western College Publishing 11 Composite Index CoincidentCoincident –Move directly with business cycle LeadingLeading –Lead business cycle LaggingLagging –Lag business cycle

13. ®1999 South-Western College Publishing 12 Leading Index Components

14. ®1999 South-Western College Publishing 13 Coincident Index Components Employees on Nonagricultural PayrollsEmployees on Nonagricultural Payrolls Personal Income less Transfer PaymentsPersonal Income less Transfer Payments Index of Industrial ProductionIndex of Industrial Production Manufacturing and Trade SalesManufacturing and Trade Sales

15. ®1999 South-Western College Publishing 14 Lagging Index Components Average Duration of UnemploymentAverage Duration of Unemployment Ratio of Manufacturing and Trade Inventories to SalesRatio of Manufacturing and Trade Inventories to Sales Changes in Labor Costs per Unit of OutputChanges in Labor Costs per Unit of Output Average Prime RateAverage Prime Rate Commercial and Industrial LoansCommercial and Industrial Loans Ratio of Installment Credit to Personal IncomeRatio of Installment Credit to Personal Income Change in Consumer Price Index for ServicesChange in Consumer Price Index for Services

16. ®1999 South-Western College Publishing 15 Federal Government and Fiscal Policy Fiscal PolicyFiscal Policy Civilian Unemployment RateCivilian Unemployment Rate Budget DeficitsBudget Deficits

17. ®1999 South-Western College Publishing 16 Federal Reserve Bank Monetary PolicyMonetary Policy Bank ReservesBank Reserves RecessionRecession Open Market OperationsOpen Market Operations Bank Discount RateBank Discount Rate Federal Funds RateFederal Funds Rate

18. ®1999 South-Western College Publishing 17 Economy And Financial Markets Bond MarketBond Market –Yield to Maturity InflationInflation Risk of defaultRisk of default Stock MarketStock Market –Leading indicator of trends in real GDP

19. ®1999 South-Western College Publishing 18 Valuing The Overall Stock Market Book ValueBook Value –Ratio of stock’s price to book value DividendsDividends –Price/dividends ratio –Price/earnings ratio EarningsEarnings –P/E ratio –E/P ratio

20. ®1999 South-Western College Publishing 19 Industry Analysis Industrial Life CycleIndustrial Life Cycle Demand and Supply AnalysisDemand and Supply Analysis Industry ProfitabilityIndustry Profitability International Competition and MarketsInternational Competition and Markets