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This book combines both a comprehensive analytical framework and economic statistics that enable business decision makers to anticipate developing economic trends. The author blends recent and historical economic data with economic theory to provide important benchmarks or rules of thumb that give both economists and noneconomists enhanced understanding of unfolding economic data and their interrelationships. Through the matrix system, a disciplined approach is described for integrating readily available economic data into a comprehensive analysis without complex formulas. The extensive appendix of monthly key economic factors for 1978-1991 makes this an important reference source for economic and financial trend analysis.
A new and practical method for economic trend analysis is introduced that provides more advanced knowledge than available from economic newsletters. Schaeffer begins with a general description of the business cycle and the typical behavior and effect of the credit markets, commercial banks, and the Federal Reserve. Next, fourteen key economic factors regularly reported by the business press are described, such as the capacity utilization rate and yield on three-month Treasury bills. Benchmarks for each of these key economic factors are set forth, together with an insightful discussion of the interrelationships indicating economic trends. A detailed discussion of the 1978-1991 American economy, incorporating monthly data from the historical matrix, demonstrates the practical application of the matrix system. Executives, investors, financial officers, and government policymakers will find this book useful in decision making.
List of contents
Introduction
Business CyclesContinuation of Business Cycles
Recessionary or Contracting Period
Beginning of Turnaround
The Upswing
Full Capacity
Seeds for Major Downturn
Conclusion
Banking, Credit, and the Money SupplyThe Credit Markets
Money Supply
Loans and Bank Liquidity
Credit Supply and Interest Rates
The Federal Reserve System
Federal Reserve Reaction to Business Cycle
Primary Economic Factors: Definitions and BenchmarksGross Domestic Product
The Primary Factors
Primary Economic Factors: RelationshipsRelationship Analysis
Primary Economic Factors: The MatrixInitial Analytical Approach
Analytical Techniques
Matrix Application by Executives and Investors
Other Economic FactorsOther Economic Factors
Comparing Economic Factors
The Dilemma of Economic PolicyThe Pricing System
The Nature of Industrial Economic Activity
Price Stability
The Unintended Consequences of Price Stability
The Dilemma
The Shift to Influencing Output
Current Emphasis on Output and Resulting Price Instability
The New Emphasis on Productivity
Anticipating Changes in the Consumer Price Index
Review of Historical DataPurpose of Historical Analysis
Overview, 1978-1991
Review by Year
Getting StartedSources of Primary Factors
Updating Historical Matrix
Matrix Maintenance
Bibliography
Appendix: Historical Matrix 1978-1991 and Supporting Data
Index
About the author
HOWARD G. SCHAEFER is managing director of Schaefer Brothers, Ltd., a Los Angeles based investment banking firm. He previously practiced as a corporate lawyer and tax accountant specializing in corporate and international business matters. A former treasurer of the California Republican Party and member of its board of directors, he is also a frequent lecturer and writer on business and economic issues.
