ECONOMIC INDICATORS economic indicator Statistics about the economy

ECONOMIC INDICATORS

economic indicator Statistics about the economy that allows analysis of economic performance and predictions of future performance. Usually calculated monthly, quarterly, yearly Conference Board

Leading Indicators Change before the business cycle does Important for investors Predictors of the economy Stock market

Indicators Lagging Coincidental Changes a few quarters after overall economy Numbers move at the same time as overall economy Unemployment Retail Housing

Phases of the Business Cycle Highest point of economic expansion Peak Expansion GDP/GNP numbers are on the rise GDP/GNP numbers are on the declin Contraction Trough Lowest point of economic contraction

Degree of Contractions �Recession ◦ Prolonged economic contraction � 2 consecutive quarters of negative growth �Depression ◦ Recession that is especially long and severe �Stagflation ◦ Decline in real GDP with inflation

Recent US cycles 5 -8 years of growth 2000 1990 1980 1 -2 years of correction

What can these indicators tell us about the economy? Stock Market Bond Spreads Unemployment Auto/Housing Sales Housing Starts Consumer Confidence Personal Savings Rate Manufacturing Spending Inventory

Related to the Business Cycle Procyclic Countercyclic Moves in the same direction as the economy Moves in the opposite direction of the economy Positive number Negative number Inflation Unemployment

Supply Management Index Measures manufacturing activity and is determined monthly based on five indicators: new orders, production, supplier deliveries, inventories, and employment.

Consumer confidence is an economic indicator which measures the degree of optimism that consumers feel about the overall state of the economy and their personal financial situation. 1. Current business conditions. 2. Business conditions for the next six months. 3. Current employment conditions. 4. Employment conditions for the next six months. 5. Total family income for the next six months.

Exit Ticket Based on the statistical data from the US Census Bureau… what statements can you make about the current state of the US economy? what predictions would you make about the upcoming year for the US economy? What warnings would you give anyone who is trying to make statements about the health of or predictions about the future of the macroeconomy?