economic indicator  A statistic about the economy.  Allows analysis of economic performance and predictions of future performance.  Include various indices, earnings reports, and economic summaries.

Conference Board Leading Economic Indicators Average weekly hours, manufacturing Average weekly initial claims for unemployment insurance Manufacturers' new orders, consumer goods and materials Manufacturers' new orders, nondefense capital goods Building permits, new private housing units Stock prices, 500 common stocks Money supply, M2 Interest rate spread, 10-year Treasury bonds less federal funds Index of consumer expectations

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

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

Indicators LaggingCoincidental  Changes a few quarters after overall economy  Unemployment  Numbers move at the same time as overall economy  Retail  Housing

Related to the Business Cycle ProcyclicCountercyclic  Moves in the same direction as the economy  Inflation  Moves in the opposite direction of the economy  Unemployment

Major US Stock Indices moneycentral.msn.com

30 – 2 Year Yield Spreads

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

Explain which type of indicator do you believe is most helpful. Why do you economists keep such statistical data on the economy? How do you suppose these indicators affect the average American, politicians, business people, or foreign investors?