Three Attributes of Economic Indicators
- Relation to the Business Cycle / Economy Economic Indicators can have one of three different relationships to the economy:
- Procyclic: A procyclic (or procyclical) economic indicator is one that moves in the same direction as the economy. So if the economy is doing well, this number is usually increasing, whereas if we're in a recession this indicator is decreasing. The Gross Domestic Product (GDP) is an example of a procyclic economic indicator.
- Countercyclic: A countercyclic (or countercyclical) economic indicator is one that moves in the opposite direction as the economy. The unemployment rate gets larger as the economy gets worse so it is a countercyclic economic indicator.
- Acyclic: An acyclic economic indicator is one that has no relation to the health of the economy and is generally of little use. The number of home runs the Montreal Expos hit in a year generally has no relationship to the health of the economy, so we could say it is an acyclic economic indicator.
- Frequency of the Data In most countries GDP figures are released quarterly (every three months) while the unemployment rate is released monthly. Some economic indicators, such as the Dow Jones Index, are available immediately and change every minute.
- Timing Economic Indicators can be leading, lagging, or coincident which indicates the timing of their changes relative to how the economy as a whole changes.
Three Timing Types of Economic Indicators
- Leading: Leading economic indicators are indicators which change before the economy changes. Stock market returns are a leading indicator, as the stock market usually begins to decline before the economy declines and they improve before the economy begins to pull out of a recession. Leading economic indicators are the most important type for investors as they help predict what the economy will be like in the future.
- Lagged: A lagged economic indicator is one that does not change direction until a few quarters after the economy does. The unemployment rate is a lagged economic indicator as unemployment tends to increase for 2 or 3 quarters after the economy starts to improve.
- Coincident: A coincident economic indicator is one that simply moves at the same time the economy does. The Gross Domestic Product is a coincident indicator.
- Total Output, Income, and Spending
- Employment, Unemployment, and Wages
- Production and Business Activity
- Prices
- Money, Credit, and Security Markets
- Federal Finance
- International Statistics
Total Output, Income, and Spending
These tend to be the most broad measures of economic performance and include such statistics as:- Gross Domestic Product (GDP) [quarterly]
- Real GDP [quarterly]
- Implicit Price Deflator for GDP [quarterly]
- Business Output [quarterly]
- National Income [quarterly]
- Consumption Expenditure [quarterly]
- Corporate Profits[quarterly]
- Real Gross Private Domestic Investment[quarterly]
Employment, Unemployment, and Wages
These statistics cover how strong the labor market is and they include the following:- The Unemployment Rate [monthly]
- Level of Civilian Employment[monthly]
- Average Weekly Hours, Hourly Earnings, and Weekly Earnings[monthly]
- Labor Productivity [quarterly]
Production and Business Activity
These statistics cover how much businesses are producing and the level of new construction in the economy:- Industrial Production and Capacity Utilization [monthly]
- New Construction [monthly]
- New Private Housing and Vacancy Rates [monthly]
- Business Sales and Inventories [monthly]
- Manufacturers' Shipments, Inventories, and Orders [monthly]
Prices
This category includes both the prices consumers pay as well as the prices businesses pay for raw materials and include:- Producer Prices [monthly]
- Consumer Prices [monthly]
- Prices Received And Paid By Farmers [monthly]
Money, Credit, and Security Markets
These statistics measure the amount of money in the economy as well as interest rates and include:- Money Stock (M1, M2, and M3) [monthly]
- Bank Credit at All Commercial Banks [monthly]
- Consumer Credit [monthly]
- Interest Rates and Bond Yields [weekly and monthly]
- Stock Prices and Yields [weekly and monthly]
Federal Finance
These are measures of government spending and government deficits and debts:- Federal Receipts (Revenue)[yearly]
- Federal Outlays (Expenses) [yearly]
- Federal Debt [yearly]
International Trade
These are measure of how much the country is exporting and how much they are importing:- Industrial Production and Consumer Prices of Major Industrial Countries
- U.S. International Trade In Goods and Services
- U.S. International Transactions
By: Mike Moffatt, former About.com Guide
http://economics.about.com/cs/businesscycles/a/economic_ind.htm
http://economics.about.com/cs/businesscycles/a/economic_ind.htm
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