A leading indicator of economic forecast can impact Apple’s product sales forecast is the Consumer Confidence Index. Consumer Confidence is a measure of the level of optimism consumers have about the performance of the economy. Consumer Confidence influences consumption (where consumption is a large part of the Gross Domestic Product (GDP)). According to the text, Principles of Economics, “if consumers expect good economic conditions and are optimistic about their economic prospects, they are more likely to but major items such as cars or furniture.”1 While Apple products may not be considered major items, the company (Apple Inc.) could use the current consumer confidence index as a gauge on how well its products could do in the market in a particular period.(Appendix Personal consumption form freelunch.com) Unfortunately, consumer confidence here in the United States (US) has dropped (from 71.5 to 65.1) in the last two months (November and December 2012)2. This drop has been attributed to the uncertainty surrounding the fiscal cliff debate3. If consumer confidence continue to drop here in the US, Apple Inc. may have to look to overseas to make up any sales deficit.
2. What are the international economic factors that impact Apple’s product sales and cost?
APPLE’s operations and financial performance depends significantly on worldwide economic conditions. The various economic factors that come into play are: a) Personal disposable income of consumers b) Currency exchange rates c) GDP in terms of Purchasing Parity d) Market openness e) Infrastructure and networks (telephone and Internet connectivity) to use APPLE products e) stable political environment f) unemployment numbers f) Stable financial environment and finally the population. A table showing the values for selected countries where APPLE operates is shown in Appendix. From the table, it is evident that the growth markets for APPLE are US, Canada, Brazil, China, India and continental Europe. Any change in the above mentioned economic factors will impact APPLE’s sales and financial statements.