There are several economic indicators which can be used to make a forecast about the performance of a company or an organization. In this case, we are discussing such hotel and casino as Caesar Palace. The first indicator is the annual percent change in real GDP. This measurement includes private consumption, governmental spending, and gross investment.
It can tell about the overall health of the country’s economy. According to Bureau of Economic Analysis, the real GDP grew by 2.5 percent (2011, unpaged). This change indicates at a positive trend in the country’s economy. However, organizations should not rely only on this index while making a macroeconomic forecast.
The second important measurement of economic vitality is Consumer Price Index or CPI. This index can help us measure the rate of inflation by showing the changes in prices of basic products and services consumed by people over a certain period of time.
The main peculiarity of CPI is that it focuses on a set of specific goods and services such as food, medical care, transportation, clothes, energy, and so forth (Bureau of Labor Statistics 2011, unpaged). According to the data published by the Bureau of Labor Statistics, this index increased by 3.5 percent. This information suggests that the cost of living in the United States grew during the last year.
Thus, one can say that the forecasts will not be favorable for organizations like Caesar Palace. The problem is that customers will have to spend more money on some essential consumer goods rather than on the services provided by Caesar Palace or similar companies.
The third valuable criterion is the rate of unemployment. It can tell about the purchasing power of the population in the country. In November, it fell by 0.4 percent; currently, it constitutes 8.6 percent of the total population (Bureau of Labor Statistics 2011, unpaged). In comparison with the previous year, this rate of unemployment has declined.
However, it still remains at a relatively high level, and this means that fewer customers can use the services offered by the company. Certainly, Caesar Palace targets mostly very prosperous customers. However, unemployment in the United States can produce only adverse effects on this organization.
Furthermore, when making a forecast about the company’s performance, one should also take into account household income. It is a valid criterion that can help companies measure the purchasing power of the population.
According to the US Census Bureau, in 2010 the median household income was $ 49. 445 (2011, p. 6). In turn, in 2009, the median household income was $ 50, 599 (US Census Bureau, 2011, p. 6). Therefore, we can observe a negative trend. Most importantly, one can argue that the clients of organizations like Caesar Palace will fewer opportunities to use their services.
Finally, Caesar Palace should pay close attention to long-term interest rates. This index is particularly important because it helps to assess the availability of capital to American organizations. Special attention should be paid to the rates set by the US. Department of Treasure.
The thing is that they often determine long-term interest rates set by other financial institutions operating in the country. Currently, it is set at 2.11 percent (US. Department of Treasure 2011, unpaged). These data suggest that capital will be accessible during the next ten years. So, by looking at these five economic indicators, one can better predict future financial performance of the company.
Bureau of Economic Analysis. (2011). National Income and Product Accounts. Retrieved from: http://bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm
Bureau of Labor Statistics. (2011). Consumer Price Index Summary. Retrieved from: http://www.bls.gov/news.release/cpi.nr0.htm
Bureau of Labor Statistics. (2011). Employment Situation Summary. Retrieved from: http://www.bls.gov/news.release/empsit.nr0.htm
The US Census Bureau. (2011). Income, Poverty, and Health Insurance Coverage in the United States: 2010. Retrieved from: http://www.census.gov/prod/2011pubs/p60-239.pdf
The US Department of Treasury. (2011). Resource Center. Retrieved from: http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield