What Does an Industrial Economist Do?
An industrial economist studies the financial strength of individual companies and the economic performance of different industries as a whole. Economists use corporate results, production figures and job growth to produce reports on the current state of the economy. Governments and financial analysts rely on economists to make accurate predictions about the future performance of the economy.
Many industrial economists are employed by government entities as advisers, while others take on similar roles at corporations, banks, and investments firms. Universities and other educational institutions employ economists as professors and teachers while other economists work full-time or on a contractual basis for newspapers, televisions stations or online finance websites. Despite the different types of employment opportunities available to an industrial economist, all of these economists base their opinions on the same kind of industry related data.
An industrial economist begins to analyze the financial performance of a particular firm by comparing its production costs with its output. The price of raw materials can change over time and a firm has little control over these variable costs. Other costs, such as staff wages, are controllable. Marketing and advertising costs cut into a company's profits but these upfront costs are often offset by increased profit levels because marketing exposes more potential clients to a firm's products. Economists study data relating to a firm's fixed costs, variable costs, and profits and use this information to make predictions about the firm's short-term and long-term sustainability.
Beyond studying the financial health of individual companies, an industrial economist gathers data from a number of different firms that operate within a single sector of the economy. Economists use information detailing the firm's hiring practices and sales trends to formulate opinions about the health of different sectors of the economy. Investors often base decisions about the buying and selling of stocks on the recommendations of industrial economists. Governmental entities use the data that economists provide when making major economic policy decisions. In many instances, governments receive advance notice about impending recessions from industrial economists.
Some economists study past economic history and look for trends that mirror current economic conditions. Governments often seek advice from such economists and attempt to learn from the mistakes of past administrations in terms of how economic problems are addressed. Statistics can often be interpreted in a number of different ways and industrial economists often have disagreements about economic trends. Contrarian economists typically focus on negative economic developments while other economists tend to focus on encouraging developments and make suggestions about ways the government could take steps to improve the state of the economy.
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