Economic Forecasting

In: Business and Management

Submitted By b1zkits
Words 649
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Purchasing Groceries

The simple act of purchasing groceries is in fact not as simple as it may seem. A walk down the aisle of any grocery store reveals that we have products that come from all over the world. The prices we pay come from a variety of factors, from our trade agreements with foreign nations, whether the products we seek can be obtained locally, and the ultimate factor: price. If the government raises taxes on food items, and the income of a household is too low, then families might forego buying anything other than necessities, and shop for the lowest prices.
As food is a primary need, many businesses find themselves merging to compete with such powerhouses as WalMart and Costco. Traditional supermarkets find themselves struggling as these chains take lower profit margins on groceries because food drives people into their locations. An example of this is the merging of Albertson’s and Safeway. They combined so that their purchasing power would allow them to better compete against the larger competitors. Keeping their prices lower allows them to have more business flowing through their stores.
Massive Layoff of Employees
Massive layoffs of employees is a consequence of recessions. As the workforce decreases as does income, demand for goods also decreases. The loss of buying power causes households to stop purchasing luxury items, and focus on necessities. Businesses in turn have less employees for production, and loss of revenue from this action. They may hold back on money spent on research and development, or improving facilities or upgrading equipment because of a decrease in funds to do so. The government winds up paying out unemployment, and is also not immune to layoffs during a recession. Massive layoffs cause a drop in the GDP, and this is the primary measure of the nation’s economy. As businesses begin to feel the effects of the layoffs,…...

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