Economic Indicators Essay - 535 Words

Economic Indicators nbsp;nbsp;nbsp;nbsp;nbsp;For the individual who watches CNN a great deal, the term Economic Indicators well recognized. However, for the individual who chooses not to make CNN a primary station, the term Economic Indicators can be extremely confusing. Economist often use very unlike terms when referring to the fluctuating economy. Economic Indicators happens to be one of the many terms that they use. So, what exactly are Economic Indicators, and what purpose do they serve? In addition to the previous stated questions, are they really that important? nbsp;nbsp;nbsp;nbsp;nbsp;Economic Indicators serve the purpose of spying on the economy, let me further elaborate. Economic Indicators are economic statistics.†¦show more content†¦Beginning with the types of Indicators, they can be classified as leading, lagging, or contemporaneous also called coincident. First, leading indicators are those that change ahead of the economy. This means that the leading indicators change before the economy. A good example of a leading indicator, which also will be used later on, is stock market returns. The stock market declines before it is evident in the economy and it increases before the economy is affected by it. The next type of an indicator is lagged. A lagged indicator changes after the economy does. It is referred to as lagged because it changes quarters after the economy. For example, the unemployment rate, one would consider to be a lagged indicator. Unemployment does not improve immediately after the economy improves. It will take two or three quarters so that unemployment reflects the economy. The last type of Economic Indicator is contemporaneous or coincident. A contemporaneous economic indicator is one that moves at the same rate as the economy. When the economy goes down, it is reflected by the indicator. Gross Domestic Product is considered to be a contemporaneous indicator. As the economy improves, GDP improves and as the economy declines the same is true for GDP. Without going into detail, the three relationships that Economic Indicators can have with the economy are Procyclical, Countercyclical, and Acyclic. IfShow MoreRelatedLeading Economic Indicators1428 Words   |  6 PagesLeading Economic indicators offer statistics and data about the economy. There are a total of ten economic indicators that the conference board uses to gather statistics and data to determine the status of the economy and what is expected. 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