Free research paper example on Macroeconomics:
The attack of September 11, 2001, has created a severe shock to the global economy. The attack helped reduce the confidence of economic agents. Although other nations were affected, the United States stands to suffer the most.
Before the September attack oil prices soared, while inflationary concerns increase in some countries. A steep decline in the technology field of information and communications was felt. Capital spending by corporations, due to a decline in profits, were incurred. This created cutbacks and a drop in the stock market.
Consumer confidence has slipped because of layoffs and unemployment. This has also caused global slowdown both in world trade and the local economy. “Doug Duncan, economist for the Mortgage Bankers Association, predicts strong economic growth the rest of this year and into 2004, but believes that the unemployment rate will barely budge, ending up at perhaps 5.7 percent at the end of 2004. “I expect not dramatic, sudden changes, but a steady improvement in employment,” he says” (Lewis).
The most important impact on world economy comes from the downfall of confidence and sharp uncertainty. The concern of safety in air traffic and tourism caused majorlayoffs. This also affected the hotel and leisure industry. This led to a decrease in consumer and business spending.
Macroeconomic policies are being adjusted to provide support of the world economy. Investors face a higher incentive to invest into riskier assets. This should cause some increase in the money market rates.
The rebound of the United States economy should come from the improvement in confidence level. This should cause the labor market and profits to stabilize.
Affected after September 11th, was supply and demand. In the United States, monetary easing has helped bring down mortgage rates and encouraged the refinancing of home loans. This caused more people to reinvest in the improvement of their homes.|
The supply and demand made a big impact on the retail side of business. Alan Greenspan said in his testimony before Federal Reserve Board’s semiannual monetary policy report to the Congress, before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate July 16, 2002, “Still, despite concerns about economic prospects, equity valuations, terrorism, and geopolitical conflicts, consumers do not appear to have retrenched in retail markets.”
“However, some factors are outside the influence of Mr. Greenspan. Any type of showdown with Syria or North Korea, diplomatic or otherwise, is capable of casting an economic shadow not unlike the one seen leading up to war with Iraq” (McBride).
The Home Depot is the largest home improvement and second largest retailer in the United States. They operate stores in all 50 states and the District of Columbia. Home Depot has sourcing offices in China, and stores in the U.S., Mexico, Canada, and Puerto Rico, making them a global company. They import products from over 40 countries. Home Depot is the fastest growing retailer in United States history. They are the first to reach $58.2 billion in sales, in the year 2002. The Home Depot common stock has been publicly traded since 1981. It is listed on the New York Stock Exchange under the symbol “HD”.
Last July they opened The Floor Store in Atlanta, Georgia. This store offers 15,000 skus of carpeting and other types of flooring, as well as installation. Home Depot suppliers include such names as Mohawk, Pergo, Shaw, and Armstrong. These suppliers provide the carpet, laminate, and vinyl flooring from their mills.
Cover-All flooring has sub-contracted with Home Depot to provide installation for their flooring customers. Cover-All has increased their business from one service center and three employees to 47 service centers nationwide, and over 100 employees. This has been accomplished in a ten year period. This makes Cover-All the largest installation company in the United States. Cover-All’s goal is to have 100 service centers opened by the year 2005.
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