Economic Forecasting Essay

short borrowing from the national Reserve funds is always make up because of a reduction in the brush off rate. The Federal Reserve System has been consistently reducing the discount rate in recent days, due to which short-run borrowing has been insurrection so as to maintain liquidity.In the division 2004, short-run borrowing from the Federal Reserve funds equaled $212.132 cardinal, that is, $212132000. When the discount rate was further reduced, short-term borrowing in 2005 was $290.663 million (or $290663000). The difference between the short-term borrowings of 2004 and 2005 was $78531000.In the year 2006, short-term borrowing from the Federal Reserve funds change magnituded yet again because of a reduction in the discount rate. Short-term borrowing in 2006 equaled $245.595 million (or $245595000) (Citigroup Annual Report, 2006). The difference between the short-term borrowing of 2005 and 2006 was $45068000.So as to predict the short-term borrowing for years 2007 and 2 008, we calculate the honest difference in short-term borrowings from 2004 to 2006 78531000 + (-45068000)/2 = 16731500.In 2007, therefore, short-term borrowing is predicted to be 245595000 + 16731500 = $262326500 (or $262.3265 million). In 2008, short-term borrowing is predicted to be 262326500 + 16731500 = $279058000 (or $279.058 million).Income tax and Citibank annual income rateReductions in corporate tax increase the net income of Citibank. With a reduction in corporate tax from 35 to 30, the net income of the company in the year 2004 amounted to $17,045 million in the year 2005, it amounted to $24,589 million and in the year 2006, the net income was $25,538 (Citigroup Annual Report).The net increase in income from 2004 to 2005 was 24,589 17,045 = 7544 million $.The net increase in income from 2005 to 2006 was 25,538 24,589 = 949 million $.Thus, the average increase in net income = (7455 + 949)/2 = 4202 million $.Without taking into thoughtfulness the some other variables t hat may have an influence on net income, we preempt predict Citibanks net income in the year 2007 to be 25,538 + 4202 = 29,740 million $. In the year 2008, the net income of the company without due consideration of other variables would be 29,740 + 4202 = 33,942 million $.