Assignment 2: Final Report
Credit Card Issuing
Nowadays in the world of credit, anyone can get it with a credit score of 500 and more. It used to be a time where credit use to be given to only older established adults with a high credit score. Now in 2019 whenever you make a purchase today with the promise to pay for it tomorrow, you are using credit. Before credit cards became so accepted, merchants had their credit accounts. Our grandparents, or parents, might go to the market, pick up groceries for this week, and promise to pay the bill next when they received their salary. The grocer was extending credit. Now we have college students with credit cards, and the economy has been growing because of it.
Size and/or Growth of Industry
With the economy today, using credit is a must at this time. When people use their credit cards, they may be using them as a means to support purchases that they couldn’t otherwise afford. Because consumers are making these purchases, businesses are then generating revenue they might not have received, is stimulating the economy. CPI rose by 2.9% YoY; it’s the highest reading since March 2012(CNBC, 7/13/18). looking at different inflation times and how they stack up against the Federal government 2% inflation target.
For the next two years, market shareholders expect the increase to run below the Federal government target because of GDP growth slowdown concerns. So, on a 5 to 10-year basis, shareholders expect inflation to run somewhat above the 2% inflation level. Consumer credit in the United States went up by 16.55 billion in December 2018, that was down from an upwardly revised 22.41 billion gains in the previous month and somewhat under market expectations of a 17.0 billion increase (Bloomberg, 7/12/18). That’s the lowest increase in three months. Spinning credit including credit card borrowing rose 1.7 billion, compared to an upwardly revised 4.9 billion advances in November. But, non-revolving credit includes loans for education and automobiles jumped by 14.9 billion, after rising an upwardly 17.5 billion in the prior month. Consumer Credit in the United States averaged 4.73 Billion from 1950 until 2018, reaching an all-time high of 118.08 Billion in December of 2010 and a record low of -113.42 Billion in December of 2015. So I think credit is here to stay because consumers need it as a backup.
Macroeconomic Indicator or Policy and Its Importance and Impact
Credit has always been a significant part of the import and export trades. The U.S. trade deficit, for example, issuing credit does worsen when the economy is growing actively. But, the country’s chronic trade deficit has not prevented it from continuing to be one of the most productive nations in the world. By using, cash-in-advance, an exporter can avoid credit risk because payment is provided before the use of the goods is given. International sales, wire commands, and credit cards generally are used to do cash-in-advance opportunities open to exporters. With the progress of the Internet, escrow services are becoming another cash-in-advance option for small export businesses (USDA,2018). So, wanting payment in advance is the least common option for the buyer, because it creates unfavorable cash flow. Also, foreign buyers are also concerned that the goods may not be sent if the payment is made in advance, so credit makes them feel more at ease because it is a paper trail of the debt. So, exporters who maintain this payment method as their sole method of managing business may lose to opponents who offer more attractive payment terms. For importers, any payment is a contribution until the goods are received.
Inflation – Recent Trend Within the Credit Issuing Industry
ocus on the stability or increase/decrease of the chosen indicator when commenting on the graph, be certain to follow your graph or table with substantiated comments, explaining any major discrepancy in the data or the change in the shape of the curve.
- Do not use bulleted or numbered lists.
- Write clearly and professionally; follow the Strayer Writing Standards.
Write a one-paragraph conclusion that summarizes how you think the industry will perform in the future. Attention should be paid to whether the observed trend is expected to continue.
This should be your (own) opinion.
Explain what you learned about the topic. Attention should be paid to whether the observed trend is expected to continue.
You may also expand upon this point by explaining what conclusion you draw from your research on the topic.
Do not use bulleted or numbered lists.
Write clearly an