Economics is explained as the social science that studies the production, distribution and consumption of goods and services. As a guideline for economics, the used of economic indicators are used as a means of predicting or making a forecast about the economy and the different factors that affect those forecast. The purpose of this paper is to identify how the certain economic indicators affect the industry domestically and internationally. The economic indicators to be discussed are the unemployment rate, Gross Domestic Product (GDP), interest rates, inflation rates, Producer Price Index (PPI), and oil and fuel prices. Over the past few years this industry has been significantly affected by such events as the September 11, 2001 terrorist bombing, the high and escalating prices of fuel and the shortage caused by Hurricane Katrina in August 2005. These events were world shaking events and in relations to the micro and macro economics presented a ripple effect that to this day is still being felt. The Airline industry was hit worldwide with massive events that affected all economic indicators and almost destroyed the businesses. In the beginning years of economic studies, it was previously thought that economic problems were only caused by non-economic events that only affected the things in that arena. However, with the introduction of Keynesian economic theory, of "everything at once", economist and society began to view that with one change, all things were affected. All businesses began seeing that the market held a variety of interest and the interest in one could drastically affect the interest of another. The government and its economic policies also contributed to how the airlines business either improved or fell. Teams A's analysis of these factors will attempt to show all these factors and how the future of this industry can be predicted from the factors. The airline industry is a unique one when it comes to understanding why the unemployment rate is at the rate it currently is. "The unemployment rate is the percentage of people in the economy who are willing and able to work but who are not working (Colander, 2004)." During seasonal changes unemployment fluctuates; for example, during the Christmas season more companies are looking for temporary employees to meet the shopping demands of consumers and unemployment decreases. Due to the attacks of September 11th there has been a dramatic increase in the unemployment rate. Although the industry is improving and now still building since the attack there are still many people who are out of work because of how people feel about flying. In 2003, the airline industry had an unemployment rate of 15%, which is three times the overall unemployment rate in the United States (Pelosi, 2003). There are still many people who are out of work due to the slowdown in business since the terrorist attacks and also due to the economic slowdown our country is experiencing. Up until recently, it was thought as the economy starts to repair itself the unemployment rate is starting to decrease in the airline industry. To date, the airline industry has shed very few jobs as employment is up from a year ago. People believed the airlines had recovered from the disaster of September 11, 2001. Yet, this will likely change in the next two months due to announcement of large layoffs by most major carriers. [pic]
(Unemployment Insurance, Nancy Pelosi, http://www.speaker.gov/legislation?id=0215) [pic](US Civilian Unemployment Rate Forecast, The Financial Forecast Center, http://www.forecasts.org/economic-indicator/unemployment-rate.htm) Gross Domestic Product (GDP) is the market value of all final goods and services produced within a country in a given period. It is also considered the sum of value added to every stage of production of all final goods and services produced within a country in a given period. GDP= consumption+...
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