Economic Indicators essays

Economic Indicators essays The million (or should we say 'billion' now) dollar question is whether or not the United States' economy will stay in it's record 107 month expansion (according to the index of leading indicators) or come out of the boom and take a downturn into a recession. Nobody, including the Chairman of the Federal Reserve, Alan Greenspan has a crystal ball to provide insight as to what will happen if interest rates are raised, lowered, or left alone. However, Economists have developed a set of indicators to aid in predicting when a recession is about to occur and when the economy is in one. Indicators should not be mistaken for predictors. They are simply forecasting tools, and like any forecast can be misleading. The index of leading indicators that is reported in the popular press shows our economy is still in an expansion. For the purposes of our evaluation of the economy, we chose the Principle Economic Indicators tracked by the Bureau of Economic Analysis and the U.S. Census Bureau under the Economics and Statistics Administration at the U.S. Department of Commerce. There are thirteen Principle Economic Indicators, and they fall into five major categories: National Output and Income; Orders, Sectoral Production, and Inventories; Consumer Spending; Housing and Construction; and Foreign Trade. The first of the five major categories directly relates to measuring the growth of the U.S. economy. National Output and Income consists of the Gross Domestic Product (GDP), Personal Income, and Corporate Profits measurements. GDP is the primary measurement of growth and measures the total amount of goods and services produced by governments, businesses, people, and property located within the United States. Both real (adjusted for inflation) and nominal (current value in dollars) data is collected for computing the GDP. The base year for the real data is 1997. The GDP is normally reported as an annualized quarter-to-quarter change. ...