An economic indicator (or business indicator) is a statistic A statistic is a single measure of some attribute of a sample (e.g. its arithmetic mean value). It is calculated by applying a function (statistical algorithm) to the values of the items comprising the sample which are known together as a set of data about the economy Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek οἰκονομία from οἶκος (oikos, "house") + νόμος (nomos, "custom" or "law"), hence "rules of the house(hold)". Current economic. Economic indicators allow analysis of economic performance and predictions A prediction or forecast is a statement about the way things will happen in the future, often but not always based on experience or knowledge. While there is much overlap between prediction and forecast, a prediction may be a statement that some outcome is expected, while a forecast may cover a range of possible outcomes of future performance. One application of economic indicators is the study of business cycles The term business cycle refers to economy-wide fluctuations in production or economic activity over several months or years. These fluctuations occur around a long-term growth trend, and typically involve shifts over time between periods of relatively rapid economic growth (expansion or boom), and periods of relative stagnation or decline (.
Economic indicators include various indexes, earnings reports, and economic summaries. Examples: unemployment Unemployment occurs when a person is able and willing to work but currently is without work. The prevalence of unemployment is usually measured using the unemployment rate, which is defined as the percentage of those in the labor force who are unemployed. The unemployment rate is used in economic studies and indices including the United States' rate, quits rate, housing starts Housing starts is the number of privately owned new houses on which construction has been started in a given period. This data is divided into three types: single-family houses, townhouses or small condos, and apartment buildings with five or more units, Consumer Price Index A consumer price index is a measure estimating the average price of consumer goods and services purchased by households. A consumer price index measures a price change for a constant market basket of goods and services from one period to the next within the same area (city, region, or nation). It is a price index determined by measuring the price (a measure for inflation In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the price level rises, each unit of currency buys fewer goods and services; consequently, annual inflation is also an erosion in the purchasing power of money – a loss of real value in the internal medium of exchange), Consumer Leverage Ratio Consumer Leverage Ratio is a term popularized by William Jarvis and Dr Ian C MacMillan in a series of articles in the Harvard Business Review and refers to the ratio of total household debt, as reported by the Federal Reserve System to disposable personal income, as reported by the US Department of Commerce, Bureau of Economic Analysis, industrial production An economic report that measures changes in output for the industrial sector of the economy. The industrial sector includes manufacturing, mining, and utilities. Although these sectors contribute only a small portion of GDP , they are highly sensitive to interest rates and consumer demand. This makes Industrial Production an important tool for, bankruptcies Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay its creditors. Creditors may file a bankruptcy petition against a business or corporate debtor in an effort to recoup a portion of what they are owed or initiate a restructuring. In the majority of cases, however, bankruptcy is initiated by, Gross Domestic Product The gross domestic product or gross domestic income (GDI) is a measure of a country's overall economic output. It is the market value of all final goods and services made within the borders of a country in a year. It is often positively correlated with the standard of living, though its use as a stand-in for measuring the standard of living has, broadband internet penetration Broadband Internet access, often shortened to just broadband, is a high data rate Internet access—typically contrasted with dial-up access using a 56k modem, retail sales Retailing consists of the sale of goods or merchandise from a very fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be individuals or businesses. In commerce, a "retailer&, stock market A stock market or equity market is a public market for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately prices, money supply In economics, the money supply or money stock, is the total amount of money available in an economy at a particular point in time. There are several ways to define "money," but standard measures usually include currency in circulation and demand deposits changes.
The leading business cycle dating committee in the United States of America ^ b. English is the de facto language of American government and the sole language spoken at home by 80% of Americans age five and older. Spanish is the second most commonly spoken language is the National Bureau of Economic Research The National Bureau of Economic Research is a US private, nonprofit research organization dedicated to studying the science and empirics of economics, especially the American economy. It is "committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community." (private). The Bureau of Labor Statistics The Bureau of Labor Statistics is a unit of the United States Department of Labor. It is the principal fact-finding agency for the U.S. government in the broad field of labor economics and statistics. The BLS is a governmental statistical agency that collects, processes, analyzes, and disseminates essential statistical data to the American public, is the principal fact-finding agency for the U.S. government in the field of labor economics and statistics. Other producers of economic indicators includes the United States Census Bureau The United States Census Bureau is the government agency that is responsible for the United States Census. It also gathers other national demographic and economic data. As part of the United States Department of Commerce, the Census Bureau serves as a leading source of data about America's people and economy and United States Bureau of Economic Analysis The Bureau of Economic Analysis is an agency in the United States Department of Commerce that provides important economic statistics including the gross domestic product of the United States. Its stated mission is to "promote a better understanding of the U.S. economy by providing the most timely, relevant, and accurate economic data in an.
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Classification by timing
Economic indicators can be classified into three categories according to their usual timing in relation to the business cycle: leading indicators, lagging indicators, and coincident indicators.
Leading indicators
Leading indicators are indicators that usually change before the economy as a whole changes.[1] They are therefore useful as short-term predictors of the economy. Stock market returns are a leading indicator: the stock market usually begins to decline before the economy as a whole declines and usually begins to improve before the general economy begins to recover from a slump. Other leading indicators include the index of consumer expectations, building permits, and the money supply.[citation needed] The Conference Board The Conference Board, Inc. is a non-profit global business organization supported by business executives that holds conferences, convenes executives and conducts business management research. It holds 501(3) tax-exempt status in the United States. It connects more than 1600 corporations in nearly 60 nations, its worldwide conferences attracting publishes a composite Leading Economic Index consisting of ten indicators designed to predict activity in the U. S. economy six to nine months in future.
Lagging indicators
Lagging indicators are indicators that usually change after the economy as a whole does. Typically the lag is a few quarters of a year. The unemployment rate is a lagging indicator: employment tends to increase two or three quarters after an upturn in the general economy. In finance, Bollinger bands Bollinger Bands are a technical analysis tool invented by John Bollinger in the 1980s. Having evolved from the concept of trading bands, Bollinger Bands can be used to measure the highness or lowness of the price relative to previous trades are one of various lagging indicators in frequent use. In a performance measuring system, profit earned by a business is a lagging indicator as it reflects a historical performance; similarly, improved customer satisfaction is the result of initiatives taken in the past.[citation needed]
The Index of Lagging Indicators is published monthly by The Conference Board, a non-governmental organization, which determines the value of the index from seven economic variables. These components tend to follow changes in the overall economy.
The components are:
- The average duration of unemployment Unemployment occurs when a person is able and willing to work but currently is without work. The prevalence of unemployment is usually measured using the unemployment rate, which is defined as the percentage of those in the labor force who are unemployed. The unemployment rate is used in economic studies and indices including the United States' (inverted)
- The value of outstanding commercial and industrial loans
- The change in the Consumer Price Index A consumer price index is a measure estimating the average price of consumer goods and services purchased by households. A consumer price index measures a price change for a constant market basket of goods and services from one period to the next within the same area (city, region, or nation). It is a price index determined by measuring the price for services
- The change in labour cost per unit of output
- The ratio of manufacturing and trade inventories to sales
- The ratio of consumer credit outstanding to personal income
- The average prime rate charged by banks
Coincident indicators
Coincident indicators are those which change at approximately the same time as the whole economy, thereby providing information about the current state of the economy. Like personal income. There are many coincident economic indicators, such as Gross Domestic Product The gross domestic product or gross domestic income (GDI) is a measure of a country's overall economic output. It is the market value of all final goods and services made within the borders of a country in a year. It is often positively correlated with the standard of living, though its use as a stand-in for measuring the standard of living has, industrial production and retail sales are coincident indicators. A coincident index may be used to identify, after the fact, the dates of peaks and troughs in the business cycle.[2]
There are four economic statistics comprising the Index of Coincident Economic Indicators:[citation needed]
- Number of employees on non-agricultural payrolls In a company, payroll is the sum of all financial records of salaries, wages, bonuses and deductions. In accounting, payroll refers to the amount paid to employees for services they provided during a certain period of time. Payroll plays a major role in a company for several reasons. From an accounting point of view, payroll is crucial because
- Personal income income received by persons from all sources. It includes income received from participation in production as well as from government and business transfer payments. It is the sum of compensation of employees , supplements to wages and salaries, proprietors' income with inventory valuation adjustment (IVA) and capital consumption adjustment (CCAdj), less transfer payments
- Industrial production
- Manufacturing and trade sales
By direction
There are also three terms that describe an economic indicator's direction relative to the direction of the general economy:
- Procyclic indicators move in the same direction as the general economy: they increase when the economy is doing well; decrease when it is doing badly. Gross Domestic Product (GDP) is a procyclic indicator.
- Countercyclic indicators move in the opposite direction to the general economy. The unemployment rate is countercyclic: it rises when the economy is decreasing.
- Acyclic indicators are those with little or no correlation to the business cycle: they may rise or fall when the general economy is doing well, and may rise or fall when it is not doing well.[3]
Local indicators
Local governments often need to project future tax revenues. The city of San Francisco, for example, uses the price of a one-bedroom apartment on Craigslist Craigslist is a centralized network of online communities, featuring free online classified advertisements – with sections devoted to jobs, housing, personals, for sale, services, community, gigs, résumés, and discussion forums, weekend subway ridership numbers, parking garage usage, and monthly reports on passenger landings at the city's airport.[4]
See also
- Economic calendar Economic calendars calendar inform financiers and traders about scheduled major economic indicator releases , government reports and speeches of influential persons of the financial world. Economic calendars are usually issued on an weekly basis and updated in real time
- Economic data Economic data are usually numerical time-series, i.e., sets of data for part or all of a single economy or the international economy. When they are time-series the data sets are usually monthly but can be quarterly and annual. The data may be adjusted in various ways (for ease of further analysis), most commonly adjusted or unadjusted for seasonal
- List of economic reports by U.S. government agencies
- Big Mac Index The Big Mac Index is published by The Economist as an informal way of measuring the purchasing power parity between two currencies and provides a test of the extent to which market exchange rates result in goods costing the same in different countries. It "seeks to make exchange-rate theory a bit more digestible"
- Bureau of Labor Statistics The Bureau of Labor Statistics is a unit of the United States Department of Labor. It is the principal fact-finding agency for the U.S. government in the broad field of labor economics and statistics. The BLS is a governmental statistical agency that collects, processes, analyzes, and disseminates essential statistical data to the American public,
- CAPRI model
- Consumer Confidence Index The U.S. Consumer Confidence Index is an indicator designed to measure consumer confidence, which is defined as the degree of optimism on the state of the economy that consumers are expressing through their activities of savings and spending. Global consumer confidence is not measured. Country by country analysis indicates huge variance around the
- Consumer price index A consumer price index is a measure estimating the average price of consumer goods and services purchased by households. A consumer price index measures a price change for a constant market basket of goods and services from one period to the next within the same area (city, region, or nation). It is a price index determined by measuring the price
- Consumer Leverage Ratio Consumer Leverage Ratio is a term popularized by William Jarvis and Dr Ian C MacMillan in a series of articles in the Harvard Business Review and refers to the ratio of total household debt, as reported by the Federal Reserve System to disposable personal income, as reported by the US Department of Commerce, Bureau of Economic Analysis
- Core inflation The preferred measure by the Federal Reserve of core inflation in the United States is the core Personal consumption expenditures price index . This is based on chained dollars
- The Conference Board The Conference Board, Inc. is a non-profit global business organization supported by business executives that holds conferences, convenes executives and conducts business management research. It holds 501(3) tax-exempt status in the United States. It connects more than 1600 corporations in nearly 60 nations, its worldwide conferences attracting
- Fundamental analysis Fundamental analysis of a business involves analyzing its financial statements and health, its management and competitive advantages, and its competitors and markets. When applied to futures and forex, it focuses on the overall state of the economy, interest rates, production, earnings, and management. When analyzing a stock, futures contract, or
- Genuine Progress Index
- Gross domestic product The gross domestic product or gross domestic income (GDI) is a measure of a country's overall economic output. It is the market value of all final goods and services made within the borders of a country in a year. It is often positively correlated with the standard of living, though its use as a stand-in for measuring the standard of living has
- Inflation In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the price level rises, each unit of currency buys fewer goods and services; consequently, inflation is also an erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit
- Lipstick effect The lipstick effect is the theory that when facing an economic crisis consumers will be more willing to buy less costly luxury goods. Instead of buying expensive fur coats, people will buy expensive lipstick
- Misery index (economics) The misery index is an economic indicator, created by economist Arthur Okun, and found by adding the unemployment rate to the inflation rate. It is assumed that both a higher rate of unemployment and a worsening of inflation create economic and social costs for a country. It is often incorrectly attributed to Chicago economist Robert Barro in the 1
- SET Index The SET Index is a composite economic indicator which is calculated from the prices of all common stocks on the main board of the Stock Exchange of Thailand (SET), except for stocks that have been suspended for more than one year. It is a market capitalization-weighted price index[clarification needed] which compares the current market value of
References
- ^ Sullivan, arthur Arthur O'Sullivan is an American economist, Associate Professor of Economics at Oregon State University and author of college textbooks; Steven M. Sheffrin (2003). Economics: Principles in action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. pp. 314.
- ^ Charles Emrys Smith, 'Economic Indicators,' in Wankel, c. (ed.) Encyclopedia of business in Today's World, California, USA, 2009.
- ^ About.com, A Beginner's Guide to Economic Indicators, retrieved November 209. This was the source of "procyclic," "acyclic," etc., as well as confirmation of "leading," "lagging," etc., and the source of some of the examples.
- ^ . 2010-04-11. . Retrieved 2010-04-20.
External links
- U.S. Bureau of Labor Statistics
- A Beginner's Guide to Economic Indicators
- Investopedia Economic Indicators: An Overview
- OECD indicators
- The Conference Board - Economic Indicators
- Education - Federal Reserve Bank of New York
- FED101 - Economic Indicators
- ECRI U.S. Weekly Leading Index
Categories: Economic indicators
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Fri, 03 Sep 2010 11:21:13 GMT+00:00
Stimulus Package But Obama Readies For Middle Class Tax Reprieve AHN | All Headline News ... DC, United States (AHN) - The White House on Thursday tried to rule out the chances of a new economic stimulus package as the economic indicators stay ... Uncharted Economy? The Journal of Commerce Online (blog)
Mon, 04 May 2009 20:45:26 PDT
Some economic indicators are showing that the recession is easing a bit but Fed. Chairman Ben Bernanke is expected to report to Congress it will ... cbsnews.com.
