Answer to Question #135343 in Macroeconomics for Kenneth Darko

Question

Name 10 economics indicators and why it's important.

Answer 1

1. Real GDP (Gross Domestic Product)

The Federal Reserve uses data such as the real GDP and other related economic indicators to adjust its monetary policy.

2. M2 (Money Supply)

The Federal Reserve uses this data to assess current economic and financial conditions, and to help alter its monetary policy, which includes raising and lowering interest rates. 

3. Consumer Price Index (CPI)

This statistic is the best indicator of inflation that we have to rely on. It is particularly closely scrutinized by financial economists now since it shows inflation to be at a 16-year low. 

4. Producer Price Index (PPI)

This index is timely because it is the first inflation measure available in the month. In addition, by watching crude prices, which are first in the chain of production trends, one can sometimes spot inflation in the pipeline, before it shows up in the CPI.

5. Consumer Confidence Survey

This statistic is a leading indicator of consumer spending-consumers are more inclined to spend money when they are feeling confident about their financial and employment prospects.

6. Current Employment Statistics (CES)

This is the earliest indicator of economic trends released each month. Employment rates indicate the well-being of the economy and labor force. Changes in wages point to earnings trends and related labor costs. 

7. Retail Trade Sales and Food Services Sales

The numbers measure consumers' personal consumption across retail industries and track growth or deceleration of personal consumption spending, which makes up approximately two-thirds of the annual U.S. GDP. Analysts use the data to help track consumer spending trends and forecast the direction and magnitude of future spending. 

8. Housing Starts (Formally Known as "New Residential Construction")

Housing starts are highly sensitive to changes in mortgage rates, which are affected by changes in interest rates. 

9. Manufacturing and Trade Inventories and Sales

This data set is the primary source of information on the state of business inventories and business sales. Inventory rates often provide clues about the growth or contraction of the economy. 

10. S&P 500 Stock Index (the S&P 500)

The index is designed to measure changes in the stock prices of component companies. It is used as a measure of the nation's stock of capital, as well as a gauge of future business and consumer confidence levels.