2. economic indicator  Statistics about the economy that allows analysis of economic performance and predictions of future performance.  Usually calculated monthly, quarterly, yearly  Conference Board Conference Board

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

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

5. Phases of the Business Cycle Expansion Peak Contraction Trough GDP/GNP numbers are on the rise Highest point of economic expansion Lowest point of economic contraction GDP/GNP numbers are on the decline

6. Degree of Contractions Recession ◦ Prolonged economic contraction  2 consecutive quarters of negative growth Depression ◦ Recession that is especially long and severe Stagflation ◦ Decline in real GDP with inflation

7. Recent US cycles 1980 1990 2000 1-2 years of correction 5-8 years of growth

8. 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

9. Related to the Business Cycle ProcyclicCountercyclic  Moves in the same direction as the economy  Positive number  Inflation  Moves in the opposite direction of the economy  Negative number  Unemployment

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

11. Consumer confidence is an economic indicator which measures the degree of optimism that consumers feel about the overall state of the economy and their personal financial situation. 1.Current business conditions. 2.Business conditions for the next six months. 3.Current employment conditions. 4.Employment conditions for the next six months. 5.Total family income for the next six months.

12. Exit Ticket  Based on the statistical data from the US Census Bureau…  what statements can you make about the current state of the US economy?  what predictions would you make about the upcoming year for the US economy?  What warnings would you give anyone who is trying to make statements about the health of or predictions about the future of the macroeconomy?