Economic Indicators and Macroeconomic Forecasts

Macroeconomic forecasts determine the future directions of state macroeconomic policies. These forecasts and policies invariably impact economic performance of the airline industry. Monetary, fiscal, and budgetary decisions may cause irreversible economic effects on airlines. Simultaneously, fiscal and monetary policies only shape business approaches in airline industry, but do not guarantee its economic health. For many years, the airline industry in the U. S. has been experiencing steady growth.
The industry was building its business and economic strategies on the basis on the two major economic forecasts: those produced by OMB, and those generated by Global Insight. The Fiscal Year (FY) 2007 has displayed the continuous inconsistence of the basic economic forecasts, especially in terms of oil prices. The constantly growing oil indices have essentially undermined the leading position of the airline industry. “In early January 2008, oil prices topped $100 / barrel for the first time before retreating.
The dramatic increase in price of oil has led many analysts to revise their long-term oil price projections upward” (FAA, 2008). Oil price is just one example of the way economic forecasts impact the airline industry. These forecasts and the expected values of the major macroeconomic indices also determine future fiscal and monetary policies. Although airlines remain mainly unregulated, the industry is directly impacted by fiscal and monetary decisions state decisions. The last several years have become the period of continuous transition from economic growth to economic recession.

It was critical to immediately increase the level of consumer spending in the country. The state projections for the growing budget surplus were vanishing. The number of flights was rapidly decreasing (20% since 2002 – Eldad, 2007). A new fiscal policy was developed to reduce taxes and to implement annual tax rebates for the U. S. citizens. Fig. 1. Economic indicators (Eldad, 2007). Certainly, such fiscal approaches could help airlines survive the coming economic crisis: increased consumer spending would boost purchasing, economic activity, and ultimately, the profits of airlines.
However, after the events of September 11, 2001, airlines required additional security measures to promote demand for airline services, and to support the safety image of flights for business travelers. The state evidently needs to find additional financial resources to expand the government spending without increasing bureaucracy, and without damaging the major social policies. It is clear that the government will not use the decreasing budget surplus to promote airlines security; “instead of retiring the federal debt earlier, the government would continue to pay interest on the debt by using the surplus” (Eldad, 2007).
Lower taxes will probably increase consumer spending, but will also decrease the budget surplus. In this controversial fiscal environment, airlines will have to develop security strategies without state’s financial assistance. It is expected that mergers within airline industry will become the major tool of resolving financial and business issues in 2008 (FAA, 2008). “While the current forecast calls for continuing high growth rates throughout the forecast period, there are many downside risks inherent in these forecasts. In the near term, the largest risk is the global credit crunch” (FAA, 2008).
These credit problems have already generated a monetary response from the Fed: interest rates are being gradually decreased; consumer savings are being decreased, too. The main Fed’s task was to increase consumer confidence, and to guarantee that consumers had sufficient financial resources for business and daily transactions. Lower interest rates will distract financial resources from savings, and will direct them at spending. Consumers will no longer be interested in keeping their finances in the forms of stocks, bonds, or other instruments of high return; they will be more interested in purchasing goods and services.
As a result of these fiscal activities, airlines will have better chances to retain their existing consumers, and to attract new customers. Fiscal and monetary policies, as well as budget deficits / surpluses impact the aggregate demand; airlines feel this impact, too. “Demand is declined not only from the multiplier effects as supporting industries lost opportunities across the economy, but also due to a general malaise of consumer and business confidence in the face of continuous economic recession” (Eldad, 2007). The question is, whether the government will take a decision to directly support the most vulnerable U.
S. industries (including airlines), or will use other financial instruments to indirectly support airlines by improving business activity and consumer confidence. Although the U. S. government has taken aggressive fiscal and monetary measures, they were not sufficient to boost demand in the airline industry. Evidently, the state is not willing to finance airlines directly, but is eager to utilize the best economic instruments to improve the economy, and to promote industrial growth in airlines. The airlines should use the increased consumer spending to attract new customers.
Better consumer spending will improve economic activity; the airline industry should use promotion strategies to increase the number of business travelers. In the environment of vanishing budgetary surplus, and lower interest rates (and cheaper borrowing) the airlines should expand borrowing, to develop additional security measures, and to make the oil price shocks less pronounced. Conclusion Economic forecasts determine future fiscal, monetary, and budgetary policies in the U. S. These macroeconomic policies directly impact the economic performance of airline industry.
Currently, the state keeps to the principles of lowering taxes and increasing money availability in fiscal policy, decreasing interest rates in monetary policy, and using small budget surplus to pay interest on federal debt. Lower taxes will increase consumer spending, and airlines should develop sound advertising and promotion strategies to attract new consumers to use airline services.
Lower interest rates will create the two-fold effect on the airlines: first, they will be able to use the benefits of increased consumer spending; second, the cost of borrowing will decrease, too.This is why airlines should use the situation to borrow financial resources for the development of additional security measures, and for making the oil price shocks less pronounced.
Eldad, B. Y. (2007). The evolution of the U. S. airline industry. Springer. FAA. (2008). Aerospace forecast fiscal years 2007-2020. Retrieved May 05, 2008 from http://www. faa. gov/data_statistics/aviation/aerospace_forecasts/2007-2020/media/Risks%20to%20the%20Forecast. pdf

Calculate the price
Make an order in advance and get the best price
Pages (550 words)
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Upload your instructions
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with MyhomeworkGeeks
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
Impressive writing
Customer 452547, February 6th, 2021
Business and administrative studies
Excellent job
Customer 452773, March 9th, 2023
Thank you for your hard work and help.
Customer 452773, February 13th, 2023
Human Resources Management (HRM)
excellent job
Customer 452773, June 25th, 2023
Leadership Studies
awesome work as always
Customer 452773, August 19th, 2023
Business and administrative studies
Thank you for your hard work and help
Customer 452773, February 21st, 2023
English 101
great summery in terms of the time given. it lacks a bit of clarity but otherwise perfect.
Customer 452747, June 9th, 2021
thank you so much
Customer 452749, June 10th, 2021
Customer 452773, March 21st, 2024
excellent work
Customer 452773, March 1st, 2024
Don't really see any of sources I provided, but elsewise its great, thank you!
Customer 452697, May 8th, 2021
Human Resources Management (HRM)
excellent work
Customer 452773, July 3rd, 2023
Customer reviews in total
Current satisfaction rate
3 pages
Average paper length
Customers referred by a friend
15% OFF your first order
Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.
Claim my 15% OFF Order in Chat

Sometimes it is hard to do all the work on your own

Let us help you get a good grade on your paper. Get professional help and free up your time for more important courses. Let us handle your;

  • Dissertations and Thesis
  • Essays
  • All Assignments

  • Research papers
  • Terms Papers
  • Online Classes
Live ChatWhatsApp