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Bureau of Economic Analysis / US Economy - BEA Model
 
 
Economic / Geographic Investment Report
 
Name: US Economy
Description: US Economy based on data from the US Commerce Department's Bureau of Economic Analysis
Author: Bureau of Economic Analysis
 

 
Economic Analysis  
 
1. Importance Very important   The health of the US economy, both current and future, is critical to consider when making investment decisions.
2. Wisdom Important   If the future of the US economy is Good or Awesome, then it is an excellent time to be investing in stocks and funds. If it is Fair, then it is difficult to identify stocks and funds that will increase in the short term. It is is Bad or Terrible, then it is best to sell or not make new investments.
3. Knowledge Important   GDP needs to be growing > 4% quarter over quarter for an entire year for the economy to show signs of a persistent, strong recovery.
4. Current Assessment Fair   The BEA "Economy at a Glance" major economic indicators, including GDP growth, are signaling a "Fair" future with slow, consistent improvement in the economy
5. Future Assessment Fair   The BEA's "Economy at a Glance" major economic indicators are signaling a continued "fair" state in the economy, despite the challenges of foreclosures, unemployment and federal debt in the US, and sovereign debt issues in Europe
 
 
Probable Outcomes
 
   Possible Outcome Probability Value Reasons and Explanations
1. Awesome   0% Most indicators Awesome
2. Good   10% Most indicators Good
3. Fair   80% Most indicators Fair All the future indicators tracked by the BEA's "Economy at a Glance" are signaling a Fair state in the economy
4. Bad   10% Most indicators Bad
5. Terrible   0% Most indicators Terrible

 

Key Performance Indicator Analysis Summary   
Key Performance Indicator Importance   Current Assessment   Future Assessment  
1. Gross Domestic Product (GDP)     Very important   Fair   Fair
2. Personal Income     Very important   Bad   Fair
3. GDP by Industry     Important   Fair   Fair
4. U.S. Balance of Payments (International Transactions)     Important   Fair   Fair
5. International Investment Position     Important   Fair   Fair
6. International Trade in Goods and Services     Important   Bad   Bad
 
 
 

 
 
Name: Gross Domestic Product (GDP)
Description: GDP measures the spending on goods and services in an economy
Author:
 
US GDP Q3CY2011 - BEA
 
 
 
 
US GDP Forecast for 2012
 
 
 
 
Hyperlinks to relevant information
 
US Commerce Dept - BEA - GDP Info
 
 
Key Performance Indicator Analysis  
 
1. Importance Very important   Gross Domestic Product (GDP) is the value of goods and services produced by labor and property located in a specific country or region. It is perhaps the most important of all economic indicators.
2. Wisdom Important   As GDP goes, so goes the economy. A rising GDP lifts all sectors of the economy. A falling GDP affects all sectors of the economy.
3. Knowledge Important   > 2% increase in real GDP is fair, and yet, still a good time to invest.
4. Current Assessment Fair   Real gross domestic product (GDP) increased at an annual rate of 2.5 percent in the third quarter of 2011 (that is, from the second quarter to the third quarter) according to the "advance" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 1.3 percent.
5. Future Assessment Fair   The European sovereign debt crisis will keep the US GDP growth rate at or around 2%.
 
 
Probable Outcomes
 
   Possible Outcome Probability Value Reasons and Explanations
1. Awesome   0% > 6%
2. Good   10% > 4%
3. Fair   80% > 2% The European sovereign debt crisis, specifically in the countries of Greece, Italy and Spain, will keep the US GDP growth rate around 2%.
4. Bad   10% > 0%
5. Terrible   0% < 0%
 

 
 
Name: Personal Income
Description: Also known as "before-tax" income.
Author:
 
US Dept of Commerce - BEA - Personal Income
 
 
 
 
 
Hyperlinks to relevant information
 
US Dept of Commerce - BEA - Personal Income Info
 
 
Key Performance Indicator Analysis  
 
1. Importance Very important   Consumer spending accounts for 2/3 of the GDP of the US. Personal Income is the total income "before tax" for consumers that they can spend.
2. Wisdom Important   The more Personal Income, the greater the purchasing power of the consumer. And the greater their purchasing power, the better the economy of the US.
3. Knowledge Important   Personal income needs to be rising more than 0.2% per month for the economy to be growing adequately.
4. Current Assessment Bad   Personal income growth rates have been fluctuating, and sometimes negative. Unemployment, de-leveraging, and high foreclosure rates are keeping personal income levels down.
5. Future Assessment Fair   Personal income levels are expected to increase as the economy improves.
 
 
Probable Outcomes
 
   Possible Outcome Probability Value Reasons and Explanations
1. Awesome   0% > 1%
2. Good   10% > 0.5%
3. Fair   70% > 0.2% Personal Income levels are expected to rise adequately month over month as the economy improves, despite problems in the European economy.
4. Bad   20% > 0%
5. Terrible   0% < 0%
 

 
 
Name: GDP by Industry
Description: GDP by Industry as measured by the US Dept of Commerce - Bureau of Economic Analysis (BEA)
Author:
 
US GDP by Industry - US Dept of Commerce - BEA
 
 
 
 
US GDP by Industry - BEA - Annual Percent Changes in Value Added Prices
 
 
 
 
 
Hyperlinks to relevant information
 
US GDP by Industry - BEA info
 
 
Key Performance Indicator Analysis  
 
1. Importance Important   GDP by Industry shows the contribution to Gross Domestic Product by key sectors, revealing who is driving the economy (Government, Business or Consumers).
2. Wisdom Important   Since 2/3 of the US GDP is accounted for by consumer spending, it is important to see in the breakdown of GDP by industry their contribution versus the governments or business.
3. Knowledge Important   All sectors of the US Economy need to be growing, and most importantly, the consumer sector needs to be growing 2%+.
4. Current Assessment Fair   The private producing sectors of the US are generating goods and services at approximately 3% growth rate.
5. Future Assessment Fair   GDP growth rates will be between 2% and 4% in Q4 2011, and will likely stay in that range throughout 2012.
 
 
Probable Outcomes
 
   Possible Outcome Probability Value Reasons and Explanations
1. Awesome   0% > 8%
2. Good   10% > 4%
3. Fair   80% > 2% The European sovereign debt crises, and problems with the US housing market, high unemployment and de-leveraging, will keep GDP growth rates below 4%, and likely above 2%.
4. Bad   10% > 0%
5. Terrible   0% < 0%
 

 
 
Name: U.S. Balance of Payments (International Transactions)
Description: The U.S. Balance of payments is the combined balances on trade in goods and services, income, and net unilateral current transfer
Author:
 
US Commerce Dept - BEA - U.S. Balance of Payments
 
 
 
 
 
Hyperlinks to relevant information
 
US Commerce Dept - BEA - U.S. Balance of Payments
 
 
Key Performance Indicator Analysis  
 
1. Importance Important   The US Balance of Payment shows the relative competitiveness of the US economy in manufacturing (goods), services and income (financing) versus the world.
2. Wisdom Important   Where the US has a balance of payment surplus, it shows relative strength versus rest of the world, such as services and financing. Where it has balance deficits, it shows weakness in competition versus the world.
3. Knowledge Important   The US needs to have a growing service trade surplus for a healthy economy. The trade deficit in goods has been a trend for many years, as US consumers desire foreign products more than foreigners demand US made products.
4. Current Assessment Fair   The current US Balance of Payments is fair, with services and financing (income) at a surplus and raising steadily but slowly, and goods at a deficit, but near a constant percentage of GDP (about 3%).
5. Future Assessment Fair   Services and financing (income) trade surpluses are expected to increase steadily and slowly. The trade deficit for goods is expected to hover around $200B, but improve as the economy slowly improves.
 
 
Probable Outcomes
 
   Possible Outcome Probability Value Reasons and Explanations
1. Awesome   0% > $0B in goods surplus
2. Good   10% < $100B in goods deficit
3. Fair   80% < $200B in goods deficit Services and financing trade surpluses continue to increase slowly. Goods trade deficit hovers around $200B.
4. Bad   10% <$250B in goods deficit
5. Terrible   0% > $250B in goods deficit
 

 
 
Name: International Investment Position
Description: US Commerce Dept - BEA - International Investment Position
Author:
 
US Commerce Dept - BEA - International Investment Position
 
 
 
 
 
Hyperlinks to relevant information
 
US Commerce Dept - BEA - International Investment Position
 
 
Key Performance Indicator Analysis  
 
1. Importance Important   The International Investment Position measures the value of foreign investments in US companies and the value of US investments in foreign companies each quarter.
2. Wisdom Important   In a healthy US economy, there is both high investment in US companies by foreign investors and high investment of US companies in foreign ones.
3. Knowledge Important   The US economy needs to be within $2 Trillion of the value of foreign investments in order to have a strong, healthy economy.
4. Current Assessment Fair   US investments in foreign companies is more than $2T less than foreign investment in US companies.
5. Future Assessment Fair   The International Investment gap is likely to stay in the Fair range of less than $4.0T.
 
 
Probable Outcomes
 
   Possible Outcome Probability Value Reasons and Explanations
1. Awesome   0% < $1.0T
2. Good   10% < $2.0T
3. Fair   70% < $4.0T The value of foreign investments in US companies is likely to stay less than $4.0T throughout the slow, worldwide economic recovery.
4. Bad   20% < $6.0T
5. Terrible   0% < $8.0T
 

 
 
Name: International Trade in Goods and Services
Description: US Commerce Dept - BEA - International Trade in Goods and Services
Author:
 
US Commerce Dept - BEA - Balance on Goods and Services Trade
 
 
 
 
 
Hyperlinks to relevant information
 
US Dept of Commerce - BEA - International Trade in Goods and Services
 
 
Key Performance Indicator Analysis  
 
1. Importance Important   The International Trade in Goods and Services measures imports and exports of US goods and services, and specific trade with Canada and Japan.
2. Wisdom Important   The stronger the economy, the more competitive the US will be in having surpluses in both goods trading and services trading.
3. Knowledge Important   A trade deficit of less than $30B is the sign of a strong economy.
4. Current Assessment Bad   The current trade deficit is bad because it is greater than $40B per month.
5. Future Assessment Bad   The trade deficit is likely to remain high and in a bad range as long as the economy faces significant headwinds.
 
 
Probable Outcomes
 
   Possible Outcome Probability Value Reasons and Explanations
1. Awesome   0% < $10B
2. Good   10% < $20B
3. Fair   20% < $40B
4. Bad   70% < $60B The trade deficit ls likely to remain high.
5. Terrible   0% < $100B
 
 


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