While the indicators can be numerous, there are three broad categories of economic indicators: Leading indicators, such as consumer durables, net business formations and share prices, are used to predict the future movements of an economy. Coincident indicators, which include such things as GDP, employment levels and retail sales, are seen with the occurrence of specific economic activities. Finally, lagging indicators, such as gross national product GNPCPI, unemployment rates and interest rates, are only seen after a specific economic activity occurs.
For example, Ben Bernanke head of the Federal Reserve made a prediction in that the United States was not headed into a recession. He further claimed that the stock and housing markets would be as strong as ever.
As we know now, he was wrong. Paying attention to economic indicators can give you an idea of where the economy is headed so you can plan your finances and even your career accordingly. There are two types of indicators you need to be aware of: Leading indicators often change prior to large economic adjustments and, as such, can be used to predict future trends.
Leading Indicators Because leading indicators have the potential to forecast where an economy is headed, fiscal policymakers and governments make use of them to implement or alter programs in order to ward off a recession or other negative economic events.
The top leading indicators follow below: For example, a strong market may suggest that earnings estimates are up and therefore that the overall economy is preparing to thrive.
Economic Indicators for Australia including actual values, historical data charts, an economic calendar, time-series statistics, business news, long term forecasts and short-term predictions for . An economic indicator is a piece of economic data, usually of macroeconomic scale. Economic indicators can have a huge impact on the market; therefore, knowing how to interpret and analyze them is. An economic indicator is a statistic about an economic activity. Economic indicators allow analysis of economic performance and predictions of future performance. One application of economic indicators is the study of business cycles.
Conversely, a down market may indicate that company earnings are expected to decrease and that the economy is headed toward a recession. However, there are inherent flaws to relying on the stock market as a leading indicator.
First, earnings estimates can be wrong.
Second, the stock market is vulnerable to manipulation. For example, the government and Federal Reserve have used quantitative easingfederal stimulus money, and other strategies to keep markets high in order to keep the public from panicking in the event of an economic crisis.
Moreover, Wall Street traders and corporations can manipulate numbers to inflate stocks via high-volume trades, complex financial derivative strategiesand creative accounting principles legal and illegal. Since individual stocks and the overall market can be manipulated as such, a stock or index price is not necessarily a reflection of its true underlying strength or value.
Market bubbles are created when investors ignore underlying economic indicators, and mere exuberance leads to unsupported increases in price levels. Manufacturing Activity Manufacturing activity is another indicator of the state of the economy.
This influences the GDP gross domestic product strongly; an increase in which suggests more demand for consumer goods and, in turn, a healthy economy.
Moreover, since workers are required to manufacture new goods, increases in manufacturing activity also boost employment and possibly wages as well. However, increases in manufacturing activity can also be misleading. For example, sometimes the goods produced do not make it to the end consumer.
They may sit in wholesale or retailer inventory for a while, which increases the cost of holding the assets.Real-time coverage of the global economy, including in-depth analysis of more than economic indicators, topics and long-term trends, plus macro forecasts and outlooks.
within the overall framework of the National Business Administration Standards. Individual indicators are based on a review of prior research and Analyze cost/profit relationships to guide business decision-making.
Understand economic indicators to recognize economic trends and. An economic indicator is a statistic about an economic activity. Economic indicators allow analysis of economic performance and predictions of future performance.
One application of economic indicators is the study of business cycles. Professional Higher Education Bachelor's Programme “European business Studies” Course paper in Economics Economic indicators for analysis of living standards in Latvia and Scandinavian countries – Sweden and Norway.
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