Analysis of Economic Indicators for the United States and South Korea

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Table of Contents

Abstract
Discussion of findings
Conclusion and recommendation
Works Cited

Abstract

The four economic indicators that will be discussed in this paper are GDP, inflation rate, unemployment rate, and interest rate. Data of the four economic variables will be collected in two countries; the United States and South Korea. Gross Domestic Product (GDP) is a useful indicator of the status of the economy of a country. GDP measures the total value of goods and services produced in a country within a given period.

Unemployment rate measures the number of people in a country who are not engaged in an economically productive activity even though they are willing and able to work. Inflation rate is a measure of the general rise in the price level in an economy. The interest rate represents the cost of borrowing in an economy. The data analysis establishes that the GDP, Unemployment rate and inflation rate are higher in the United States than South Korea. However, the interest rate is lower in the United States than South Korea.

Discussion of findings

Data for the United States

The GDP increased over the period. In April, the GDP was $16.03 trillion. The value increased to $16.41 trillion in May, $16.71 trillion in June, $16.99 trillion in July, $17.42 in the month of August, and $17.85 trillion in October. The unemployment rate for the United States ranged between 7.3% and 7.6%.

In April, the unemployment rate in the United States was 7.6%. The value declined to 7.5% for the month of May and later increased again to 7.6% for the months of June and July. The rate declined to 7.4% in the month of August and declined further to 7.3% for the month of September.

The inflation rate is measured by the percentage change in the consumer price index (CPI). In April, the inflation rate was 1.5%. The rate declined to 1.1% in the month of May. However, in June, the rate increase to 1.4% and further increased to 1.8% in July. The inflation rate for August was high at 2%. However, in September, the rate declined to 1.5%. The figures for the interest rate are the benchmark rates for the central bank.

The interest rate for the United States was stable at 0.25% during the six months (Trading Economics (b) 1). An alteration of the benchmark rates affects commercial banks lending rates, inflation rate and other variables in the economy. It can be observed that the interest rate was stable because the government aims at recovering the economy especially in terms of maximum employment and price stability. The graph presented below shows the trend of GDP, unemployment rate, inflation rate and interest rate during the six months.

Trend for key economic indicators for the US

Data for South Korea

The GDP in South Korea increased over the six months. In April, the GDP was $1.1644 trillion. The value increased to $1.1714 trillion in of May, $1.1807 trillion in June, $1.1937 trillion in July, $1.2069 in August, and $1.2213 trillion in October. The unemployment rate for the country ranged between 3.1% and 3.2% during the six months. In April, the unemployment rate was 3.2%.

The value declined to 3.1% in May. It increased to 3.2% in June and remained at that level for the next two months. In the month of September the value declined to 3.1%. The inflation rate ranged between 1% and 1.4%. In the month of April, the inflation rate was 1.3%. The value declined to 1.2% in the month of May and further to 1% in the month of June and July. In the month of August, the rate increased to 1.4% and later declined to 1.3% in the month of September.

The interest rate for the country was 2.75% in the month of April. The value decline to 2.5% and it remained stable for the remaining five months (Organization for Economic Co-operation and Development 1; Trading Economics (a) 1). This was aimed at creating stability in the inflation rate and domestic financial markets. The graph presented below shows the trend of GDP, unemployment rate, inflation rate and interest rate during the six months.

Trend for key economic indicators for South Korea

State of the economy and political landscape

The economy of the United States is the largest in the world. The main sector is the service industry contributing about 80% to the GDP. Currently, the economy is recovering from the global financial crisis that occurred between 2007 and 2012. On the other hand, South Korea ranks fifteen in the world.

The main sector is the service industry contributing about 58% to the GDP followed by industry. The economy has a developed market with a population earning high income. The United States is considered to have a well laid down a political framework than South Korea. Further, the political environment in the United States is more stable than South Korea. In South Korea, there is a continuous in fighting among the political parties. This makes the environment for carrying out business not conducive.

Comparison of the key economic indicators of the two countries

The GDP for the United States is higher than that of South Korea. The GDP is more than 10 times that of South Korea. This can be an indication of an advanced and a vibrant economy for carrying out business. The unemployment rate for the United States is higher than that of South Korea.

A higher rate implies that a large percentage of the labor force of the country is not engaged in economic activity. This can be an indication that labor in the United States is readily available than South Korea. Further, the inflation rate in South Korea ranged between 1% and 1.4% while for the United States ranged between 1.1% and 2.0%. It is an indication that the inflation rate in the United States is slightly higher than that of South Korea.

Thus, the prices of commodities in the United States are more volatile than South Korea. This can be a setback for the United States market during the sale of their products. Finally, the benchmark interest rate in South Korea is higher than that of the United States. This implies that it is cheaper to borrow from the United States and it is beneficial to invest in South Korea because of higher returns.

Conclusion and recommendation

In conclusion, the United States market offers a favorable environment for carrying out business both in terms production and sale than South Korea. This can be attributed to the knowledge that the country has higher GDP, lower interest rate for borrowing and available labor than South Korea. Further, it can be observed that the government has taken necessary measures to reduce the inflation rates in the country.

These four variables are significant for the long term performance of AutoEdge. A high value of GDP enables the company to access the market with a high purchasing power. Further, low interest rates will enable the company to access funds for growth and expansion at a low cost. This advantage is vital for long term growth of the company. Further, a high unemployment rate assures the company of availability of labor for future growth of the company. Finally, political stability is vital for growth and stability of a business.

Works Cited

Organization for Economic Co-operation and Development 2013, Gross Domestic Product. Web.

Trading Economics 2013a, South Korea: Economic Indicators. Web.

Trading Economics 2013b, United States: Economic Indicators. Web.

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