BADM 527
Homework Assignment 3
Dear Class:
You should have just received an email detailing your homework assignment for this week. As
you see, I have made it due Friday of next week. I reserve the right to make the next assignment
before then.
Please turn in your work as either a MS-Word document or a pdf file. See if you can keep the
whole thing to 2 or fewer pages, including charts. You may send it to any of my myriad email
accounts, but actually I slightly prefer if you send it to smdouglas@mix.wvu.edu.
You may work together to find and discuss the data, but the final writeup must be in your own
words and it must differ significantly from work turned in by other members of your team. In
other words, you may consult with each other but I expect you to think about the questions on
your own.
Don't hesitate to ask me if you'd like some guidance.
You can find a VIDEO that will help you access the FRED data base if you double click on the
FRED icon below.
Your Devoted Professor,
Strat Douglas
BADM 527
Problem Set 3
1)
In January of 2013 Bill McBride used his well-respected Calculated Risk blog to publicize some
predictions about how the economy will perform in 2013. These predictions are listed in his series of
10 questions, which you can find at
http://www.calculatedriskblog.com/2013/01/summary-for-week-ending-january-11th.html. Although
the year is not yet over, eight months of it are gone and we have enough information to form a pretty
good idea of how accurate his predictions are likely to be.
In this assignment you must use data from the Federal Reserve’s FRED site:
http://research.stlouisfed.org/fred2/categories or from some other official site such as the Bureau of
Labor Statistics or the Bureau of Economic Analysis to assess the accuracy a specific set of Bill
McBride’s predictions for 2013.
In your answer, present your data either as a table or a graph or (preferably in most cases) both.
Provide a brief analysis that addresses the questions.
I am assigning you to answer the following questions about his predictions in Question 2: Will the
U.S. economy grow in 2013?
2)
a)
What is McBride’s specific numerical prediction for the rate of growth of US real GDP in
2013?
b)
How fast has US Real GDP grown so far in 2013? Provide actual data to support your answer,
and compare the actual numbers to McBride’s prediction. Be sure to cite the source of your
data, including the web address.
c)
What does McBride see as the principal cause of “sluggish” growth in U.S. real GDP?
d)
Use data from 2013 and the ten previous years to assess whether or not the growth rate of
government spending (total of state, federal, and local) has in fact declined recently. Be sure to
cite the source of your data, including the web address.
In January of 2013 Bill McBride used his well-respected Calculated Risk blog to publicize some
predictions about how the economy will perform in 2013. These predictions are listed in his series of
10 questions, which you can find at
http://www.calculatedriskblog.com/2013/01/summary-for-week-ending-january-11th.html. Although
the year is not yet over, eight months of it are gone and we have enough information to form a pretty
good idea of how accurate his predictions are likely to be.
In this assignment you must use data from the Federal Reserve’s FRED site:
http://research.stlouisfed.org/fred2/categories or from some other official site such as the Bureau of
Labor Statistics or the Bureau of Economic Analysis to assess the accuracy a specific set of Bill
McBride’s predictions for 2013.
In your answer, present your data either as a table or a graph or (preferably in most cases) both.
Provide a brief analysis that addresses the questions.
I am assigning you to answer the following questions about his predictions in Question 3: How many
payroll jobs will be added in 2013?
a)
What is McBride’s specific numerical prediction for the number of new jobs per month he
expects in 2013?
b)
How many jobs have been added per month so far in 2013? Provide monthly data to support
your answer, and compare the actual numbers so far to McBride’s prediction. Be sure to cite the
source of your data, including the web address.
BADM 527
c)
Does McBride expect government or private industry to add more jobs in 2013? Does he think
the government is hiring too few or too many new workers to add to economic growth?
d)
Use data from 2013 and the ten previous years to assess whether or not the growth rate of
government employment (total of state, federal, and local) has declined in recent years.
Compare these numbers to non-government sector job growth. Be sure to cite the source of your
data, including the web address.
3)
In January of 2013 Bill McBride used his well-respected Calculated Risk blog to publicize some of
his predictions about how the economy will perform in 2013. These predictions are listed in his
series of 10 questions, which you can find at
http://www.calculatedriskblog.com/2013/01/summary-for-week-ending-january-11th.html. Although
the year is not yet over, eight months of it are gone and we have enough information to form a pretty
good idea of how accurate his predictions are likely to be.
In this assignment you must use data from the Federal Reserve’s FRED site:
http://research.stlouisfed.org/fred2/categories or from some other official site such as the Bureau of
Labor Statistics or the Bureau of Economic Analysis to assess the accuracy a specific set of Bill
McBride’s predictions for 2013.
In your answer, present your data either as a table or a graph or (preferably in most cases) both.
Provide a brief analysis that addresses the questions.
I am assigning you to answer the following questions about his predictions in Question 4: What will
the unemployment rate be in 2013?
a)
What is McBride’s specific numerical prediction for the unemployment rate over the course of
2013? How does he believe that the labor force participation rate has affected the
unemployment rate?
b)
How does the actual unemployment rate in 2013 compare to McBride’s predictions? Provide
monthly data to support your answer, and compare the actual numbers so far to McBride’s
prediction. Be sure to cite the source of your data, including the web address.
c)
What is McBride’s specific numerical prediction for the labor force participation rate over the
course of 2013?
d)
How does the actual labor force participation rate in 2013 compare to McBride’s predictions? Is
there any sign of the bounceback in the labor force participation rate? Provide monthly data to
support your answer, and compare the actual numbers so far to McBride’s prediction. Be sure to
cite the source of your data, including the web address.
e)
(Extra Credit) What would be the unemployment rate in July 2013 if the labor force
participation rate were the same in July 2013 as it was in December 2010?
BADM 527
4)
In January of 2013 Bill McBride used his well-respected Calculated Risk blog to publicize some of
his predictions about how the economy will perform in 2013. These predictions are listed in his
series of 10 questions, which you can find at
http://www.calculatedriskblog.com/2013/01/summary-for-week-ending-january-11th.html. Although
the year is not yet over, eight months of it are gone and we have enough information to form a pretty
good idea of how accurate his predictions are likely to be.
In this assignment you must use data from the Federal Reserve’s FRED site:
http://research.stlouisfed.org/fred2/categories or from some other official site such as the Bureau of
Labor Statistics or the Bureau of Economic Analysis to assess the accuracy a specific set of Bill
McBride’s predictions for 2013.
In your answer, present your data either as a table or a graph or (preferably in most cases) both.
Provide a brief analysis that addresses the questions.
I am assigning you to answer the following questions about his predictions in Question 5: Will the
inflation rate rise or fall in 2013?
a)
What is McBride’s specific numerical prediction for the inflation rate over the course of 2013?
Does he see inflation as a problem? What is the Federal Reserve (“Fed”)’s current target rate,
according to McBride? Does he expect the Fed to reach its target in 2013?
b)
How does the actual inflation rate in 2013 compare to McBride’s predictions? Find the 2013
data for annual inflation as measured by the CPI, the PCE, core CPI and PCE, and the Billion
Prices Project. Provide monthly data to support your answer, and compare the actual numbers
so far to McBride’s prediction. Be sure to cite the source of your data, including the web
address.
c)
What does McBride see as the likely course of inflation over the next one or two years? Find
some data on expectations of future inflation (look for University of Michigan data under
“Prices” on the FRED site) and assess whether or not others agree with McBride’s prediction.
Provide a graph of data from the late 1970’s to the present to support your answer. Be sure to
cite the source of your data, including the web address.
d)
McBride mentions “high unemployment and low resource utilization” as contributing factors to
his outlook on inflation. Are current unemployment rates and industrial capacity utilization rates
in fact low by historical standards? Find some data on unemployment rates and industrial
capacity utilization rates (look for the latter under “Production & Business Activity” on the
FRED site) to check whether or not unemployment is high and resource utilization is low by
historical standards. Provide a graph of data from the late 1970’s to the present to support your
answer. Be sure to cite the source of your data, including the web address.
e)
(Extra Credit) Why would high unemployment and low capacity utilization rates contribute to a
low rate of inflation?