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Unemployment and Durable Goods Sales

This research examines the relationship between durable goods sales and the unemployment rate. During the past year in the United States, the unemployment rate has improved (Council of Economic Advisers, 1994, p. 12). Nevertheless, durable goods sales have yet to regain strength as had been anticipated (Council of Economic Advisers, 1994, pp. 17-18, 20-21). Managers of a major appliance chain are concerned about inventory levels. Understocking is undesirable because sales may be missed if products are not available when customers want to buy (Kotler, 1993, p. 543). Conversely, however, overstocking is equally undesirable because of the exposure to excess inventory expenses. A decision was made to analyze the macroeconomic aggregate data to determine the extent to which durable goods sales may be expected to change in relation to changes in the unemployment rate for persons 20 years old and older. The results of this analysis will provide the managers of the appliance chain with information that will improve the quality of their decisions related to inventory stocking level decisions.

The principal statistical analysis procedure which will be used in assessing the relationship between changes in durable goods sales and changes in the unemployment rate is simple regression analysis (Summers, Peters, and Armstrong, 1993, p. 295). Data included in the analysis will be for the 1970-1993 time period on an annual basis. Additionally, however, both two and three period moving average data will be calculated and subjected to regression analysis, and both the base and moving average data for durable goods will be lagged one period and subjected to regression analysis. The reason for using both moving average and lagged data in addition to the basic data is to determine which set of data combinations (basic, basic with durable goods lagged one period, moving average--two periods, moving average--two periods--with durable goods lagged ...

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Unemployment and Durable Goods Sales. (1969, December 31). In LotsofEssays.com. Retrieved 05:26, March 28, 2024, from https://www.lotsofessays.com/viewpaper/1681602.html