Economic Indicator Forecast

Running head : ECONOMIC INDICATORS FORECAST

Economic Indicators Forecast

[Author 's Name]

[Tutor 's Name]

[Class]

Abstract

Economic forecast causes serious impact on airlines industry Operational and planning procedures in airlines are heavily dependent on economic and financial forecast data . Real GDP , inflation , unemployment rate , and oil price forecasts usually determine future economic activities within airline industry

Economic Indicators Forecast

Introduction

Economic forecasts often cause irreversible impacts on the economic performance of separate industries . Airlines industry is especially susceptible to changing economic conditions . Economic forecasts are

not always objective , and economic specialists in airline industry need to adjust future economic values to the real economic conditions

According to BTF (2008 , real GDP growth rates are expected to fall to 1 .2 annually , but will catch up with other economic indicators in 2009 (2 .0 annual increase . Royal Bank of Canada (2008 ) suggests that real GDP in the U .S . will experience continuous growth with 2 .0 in 2008 , and 2 .6 in 2009 . The years 2004-2006 have displayed steady real GDP growth trends , but the U .S . has already entered the period of economic recession . This is why it is very probable that real GDP will experience constant fluctuations as BTF (2008 ) predicts Fig . 1 . Real GDP I (GPO Access , 2008 Fig . 2 . Real GDP II (World Bank World Development Indicators , 2008

The passenger demand will develop according to real GDP growth rates Airlines should be prepared to slight decrease of the air passenger traffic which may increase with the growing real GDP rates in 2009 . In their planning procedures , airlines can either change their price strategies to increase air passenger traffic , or to pursue the principles of efficient (not volume ) profitable growth

Unemployment rates and real GDP values are the two economic indicators which constantly interact . Both economic forecasts predict that unemployment rates will keep growing . According to BTF (2008 , the unemployment rates will reach 5 .0 percent in 2009 Royal Bank of Canada (2008 ) suggests that unemployment value in 2009 will equal 5 .7 . Both indices predict that unemployment will remain within reasonable limits Unemployment rates between 2004 and 2006 have been constantly decreasing , with the lowest unemployment peak in the first half of 2006 Since the middle of 2006 , the American economy has entered the period of recession unemployment rates have been slowly increasing . Royal Bank of Canada seems more accurate in its unemployment forecasts : the current unemployment growth rates , it is very probable that by the end of 2009 unemployment in the U .S . will reach 5 .7 . This forecast looks even more realistic , taking into account that the U .S . has just entered recession and American companies actively promote outsourcing procedures Fig . 3 . Unemployment rates (U .S . Department of Labor , 2008 Fig . 4 . Unemployment rates (EconEdLink , 2008

Relatively low unemployment rates will help stabilize passenger demand even against the continuous economic recession in the U .S but airlines will have to adjust their operational and planning procedures to use the benefits of low...