Johnson and Johnson’s Baby is one of the leading organizations in the United States (US) in the cosmetic industry, particularly dealing with baby cosmetics among other related skin care products(Willemsen, 1980). The brand, Johnson’s baby, dates back during 1890’s when the popular Johnson’s Baby powder was first introduced in the American cosmetic industry. Some of the products manufactured by the organization include baby powder, shampoos and baby wipes, which have seen the organization having a reputation of manufacturing baby products that have been proven to be “pure and safe.”
The organization has been recording annual sale increment, with success being attributed to the foundation it laid as one of the leading global consumer product businesses. By 1990’s the organization’s hygiene and babycare lines were making over $280m in annual sales. A decade late, the organization records an annual increase in revenue estimated at $1.8bn, emerging the most lucrative section of J&J’s enterprise. In 2016, the firm has recorded sales of up to $95m in the first three months, being the lowest for the last ten years.
GDP growth in the US economy would reflect a general increase in the demand for the nation’s product, an aspect that can result in a long-term inflation. In response to this, the Federal Reserve will increase the rate of the country’s interest rate, making borrowing or credits costly, reducing the demand by consumers and investment; reduced supply. The same case will be reflected in the case of J&J’s products, which will face a reduced demand and shortage in supply to the US market.
In the case of “inflationary spiral” in the US; inflation exceeding 2%, the prices of J&J Baby soap with aloe will be increased with an objective of rising demand in the market. The company will have to employ more workers to boost the production process so as to supply more to the market. This will, therefore, result in a further increase in demand for the J&J Baby soap with aloe, which is believed to increase the company’s profits, hence the need to boost its supply.
Unemployment in the US will imply that the purchasing power of the respective consumers of the product will be limited, hence reduced demand for J&J Baby soap with aloe. The company, according to Keynesian theory, will typically be producing those products that it will be expecting to sale. Therefore, since the demand will be lower, J&J will typically reduce its production and supply of the product, since the production and supply levels are highly determined by the demand.
The US’s real GDP increased by 2.4% from 2013, which reflected an increase in private inventory investment as well as spending by the federal government(Maynard, n.d.). From 2013 to date, there has been an acceleration in exports were offset by the acceleration in fixed investment in the nonresidential sector. After the first quarter of 2016, the country and economic expansion at an annual rate of 1.4%. On the other hand, consumer prices in the US have been going up since 2013, with the current year experiencing a 1.1% in August. This has been impacted upon by the unemployment rate which has fallen for the last three years, alternating during times of economic prosperity and recessions. The graphs below illustrate the trends in US’s GDP growth rate, inflation, and unemployment for the last three years.
Basing on the above trends, there are conclusions or arguments that can be raised in the sales volume of J&J Baby soap with aloe. The annual increase in the nation’s GDP implies that there will be a steady growth in the sales of J&J Baby soap with aloe, and thus reporting increased sales. The current inflation in the US, as from the last three years, proves to be healthy for the economy, and with the heightened purchasing power, there will be an increase in the sales of J&J Baby soap with aloe. The same is expected to base on the steady reduction in the unemployment rate, with an annual increase in the number of employed through the creation of income generation activities.
Maynard, J. A Comparison of GDP Per Capita in Canada and the United States from 1994 to 2005. SSRN Electronic Journal.
Willemsen, E. (1980). Origins of the infant’s social responsiveness: The Johnson & Johnson baby products company pediatric round table, II. Psyccritiques, 25(10).