Name
Class
10/02/2011
1.
You read that in 1960 gas cost 31 cents a
gallon. How could you tell if gas increased faster or slower than most goods
and services? Convert the price into today’s dollars by using CPI.
CPI 1960=29.6 CPI 2011=225.4
2011 price=1960
price x (2011 CPI/1960 CPI)
2.36 =
.31(225.4/29.6)
The average
price of gas today $3.64 a gallon, therefore the price of a gallon of gas has
risen in price faster than most other goods and services.
2.
Cola is an adjustment that occurs automatically
every year. It was put in place by Congress in 1972 in order to maintain the
purchasing power of people receiving benefits from Social Security. Cola is
based off the percentage change in the consumer price index for urban wage
earners and clerical workers (CPI-W).
The first
increase for cola occurred in 1975 it was for 8.0%. For the years January 2007,
January 2008, January 2009 cola increased 3.3%, 2.3%, 5.8% respectively.
January 2010 and 2011 there was a 0.0% increase in cola meaning there was no
rise in benefits for Social Security recipients. Cola did not rise in 2011
because there hasn’t been a rise in CPI-W since the third Quarter of 2008.
3.
Quarter to quarter GDP growth shows the 1st,
3rd, 4th quarters of 2008 showed a decline with only the
second quarter showing a small increase. The 1st and 2nd
quarter of 2009 showed a decline in GDP while the last two quarters showed
increases. Since the last half of 2009 GDP has risen every quarter up to the
second quarter 2011. First quarter 2011 GDP only rose by .4%. Second quarter
2011 GDP increased by 1.3%. This shows the economy is still growing, but has
fluctuated a lot recently.
The chart of
personal income from May to August shows some volatility with consumer spending
rising than falling same seems to be true with disposable income it rises than
falls sharply. In August personal income fell .1% while the prior month it
increased .1% so personal income has remained flat for at least two months.
4.
Unemployment has held at 9.1% since July with
about 14 million people are without a job. 6 million of those people are long
term unemployed making long-term unemployment 42.9% of the unemployed
population. Healthcare continues to add jobs but government employment has a downward trend. The unemployment
rate has hovered near the 9% for the last six months. The number of long term
unemployed is worrisome because many of those people may give up looking for
jobs and just leave the work force. Unemployment has a negative affect on the
entire society it often leaders to higher crime and reduced confidence in the
economy.
Consumer Price
Index for all urban consumers (CPI-U) rose .4% in August. Fuel, food, shelter,
clothing continues to increase. With the exception of June 2011 CPI-U has risen
every month since August 2010. Prices are on the rise with personal income and
disposable income being volatile, there could be a worry that prices rise
faster than people can afford to pay hurting demand for many goods and
services.
Producer price index did not change for the month of August after adjusting for seasonally changes. In July the index only rose .2 percent in July and in June it fell .4 percent. What this means is producers prices haven’t changed much over the last few months. With producer’s prices not changing much but consumer prices going up this shows that producers are in general raising their cost for other reasons other than passing on increased cost to their customers.
Productivity fell in the 1st and 2nd quarter of 2011 at a.6% and .7% annual rate. From the second quarter 2010 to second the quarter 2011 productivity increased by .7 percent. Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked of all persons, including employees, proprietors, and unpaid family workers. Year over year shows an improvement in productivity bust the first two quarters of 2011 show a possible downward trend. When productivity falls there is a need for more workers because less is getting done with the people currently employed.
5. After looking at the presentations and looking at the fed website I believe the presentations are updated monthly.
