Investments
Apple Inc.
Muhammad Arsalan Jaffari
Mustafa Sethi
Zain Aftab
Hamza Mudassar (Captain Phuddu)
Economic Analysis
The US economy is progressively slowing not only in cyclical terms but from a long
term point of view. The present slow recovery is therefore not at aberration but a part
of a long-term trend.
Such a deep-rooted slowing of the US economy clearly has major implications not
only for the United States itself but for the pattern of development of the world
economy.
In the last three and a half years, Obama said, the U.S. private sector has created 7.5
million new jobs, which is at a pace of more than 2 million jobs annually. In tandem
with employment progress, the United States also is whittling down its federal deficit
at the fastest rate in 60 years. The president emphasized he will keep making the case
for smart investments and fiscal responsibility to keep the U.S. economy in a growth
pattern, create more jobs and keep the U.S. business sector competitive in the global
economy
Smart tax policy is a key ingredient of economic growth, and the tax policy of the last
three years has had a marked impact on economic activity. This influence has been
particularly evident since mid-2003 when the Bush tax cuts were passed by.
Investment is one of main components of GDP, and also one of most variable.
Nevertheless, recent indicators suggest that the information technology revolution was
real, and booming orders for computer equipment and software are setting records
once again. The average rate of investment growth after the 2003 tax cut has been
14.6 percent. In real dollars, investment is $774 billion higher per year than it was a
decade ago. Investment is a sign of a booming economy, and it is driving the
productivity revolution that raises U.S. living standards.
Deficits themselves have not been proven to hurt the economy, but they do signal
government spending that will have to be paid for by future generations, often with
higher taxes. Lower spending is the only solution to the deficit problem that doesn't
sacrifice strong economic growth.
The alternative is a still-larger central government that crowds out investment, saps
resources from the private sector, and produces the anemic economic growth.
Over the last 60 years, the U.S. GDP has grown at an average rate of about 3.3%.
For the U.S. economy to maintain that pace between 2006 and 2016 it would need to
grow by about 5.9% over the next 5 years, according to BMO. U.S. real GDP would
need to grow 1.7% over the next five years. The U.S. economy continues to muddle
through, barely moving faster than a slug. With growth in the second quarter at
meager 1.3%
U.S. manufacturing sector is rebounding, and new regulations have strengthened the
banking system while reducing the chance of another crisis. The United States is also
reducing its dependence on imported oil and is producing more clean energy.
The trend for USs economic growth for the past five years.
Industry Analysis
Geographic growth and revenue gains expected
This year, just under 80 percent of the executives expect their companys revenue to
increase over the next year, compared with 77 percent in last years results. The
responses also indicate the growing importance of markets such as Brazil, Canada,
Mexico, and South Korea and lower revenue growth expectations for the United
States and China.
As global adoption increases for mobile and cloud technologies, revenue expectations
continue to be significant for these technologies. The majority of respondents say
cloud and mobile revenues have met or exceeded their expectations
Business challenges
Pricing pressures were cited as the most significant growth barrier over the next year,
followed by increasing labor costs and the ability to remain on top of emerging
technologies. Regulatory and legislative pressures also emerged as a more pressing
growth challenge in this years results.
The potential loss of market share to lower-cost producers was described as the largest
business model threat, followed by political or regulatory uncertainty and the
emergence of disruptive technologies.
U.S. economy expectations
Tech leaders expectations for a broader U.S. economic recovery remain silent.
Respondents anticipating the economy to remain about the same rose significantly,
with a notable decline in those with expectations for economic improvement in the
United States.
While the United States and China were again cited for driving the highest percentage
of revenue growth, this years survey demonstrated the increasing importance of
markets such as Brazil, Canada, Mexico, and South Korea however the United States
and China are likely to be the leading geographic markets for revenue growth over the
next one to two years.