Spending ,Spending ...

Looking at the numbers from current economic trends we see total GDP (as of last quarter i.e. June 11) in tune of 15 trillion USD and it can be broadly stated to be calculated from the following components
• • Personal Consumption expenditure (10.6 trillion)
• • Gross Private domestic investments(1.8 trillion)
• • Net exports of goods and services (-606 billion)
• • Government consumption expenditures and gross investment(3 trillion)

Now if we say there is a 5 % increase in GDP I assume it is ( 5% of 15 trillion) around 750 billion and will have to be reflected in one of the major components mentioned above .Logically thinking the easy way of achieving this number is to go after Personal consumption expenditure(approx 7.5 % increase) than the Gross private domestic (approx 42% increase). And hence sending money to the main street via all possible schemes (tax rebates , cash for clunkers, first time home buyers credit etc)

My question would be where are we going to see the 5% increase ? Has to be Spending , Spending ..

Touchpad Firesale

From economics 101 we know initial price can be calculated by adding the cost price plus a mark up that would attract a consumer to buy the product. There can be several factors affecting this equation like break even time, branding of product, competition , value add of product .
A study of consumer behavior would give me a lot of information to price the product because at the end of day that will be a major driver in pricing.
A recent case to study on these lines would be of HP touchpad ,the new tablet was sold at 499$ and with a decision to move away from PC business and stopping support on WebOS , HP started selling the same model for 99$.There were lines of folks outside bestbuy and other retailers and it sold out in one day. HP must have done a good initial pricing due diligence effort to begin with but one still wonders what was the real reason ?

Are Corporate Profits related to Employment ?

I don’t see a direct correlation between corporate profits and employment and in fact would suggest that when the world is becoming flatter and flatter and technology advances at a high-speed this basic notion of “If a company is doing well it will hire more” will slowly taper out.
Take for example Consulting and Professional services sector which has done well and thus Big 5 are hiring in India and China at breakneck speed .Same goes to Manufacturing sector where technological advancements and outsourcing have kept the company profits buoyant where as hiring is down. I think this is a fundamental supply problem, think of it as this way , If Walmart gets a product manufactured for lesser cost than doing it in China why would it not change its procurement policies ?

Now this can be done either 2 ways one is to increase our population and thus the add cheaper workforce (which is not practical) or get the use of technology to reduce the price to produce. The demand is there but supply of labor force is short