Pretty Good Indicator Of The Economy example essay topic

Gina Lloyd Economic Indicators There are ten main indicators to help predict the economic future. It is not always 100 percent correct but can lead generally lead you in the right direction of the economy. A change in one direction or the other in just one element doesn't always tell us a true forecast either. That is why the general rule is to look at whether three or more of the ten factors are changing in the same direction over a three month period.

I will examine each of the ten indicators and how they are rating in today's economic world. Number one on the list is the average work week. Right now the average work week for general careers is 40 (forty) hours per week, usually five- eight hour days. There is some discussion going on in the government as to allow overtime at all in the career world. I think they are just going overboard and trying to over fix the problem of stressed out and overworked employees.

Less work time, mean less money, which mean people spend less- this isn't good. Second on the list for an economic indicator is - Intial claims for unemployment insurance. In the week ending Sept. 27, the advance figure for seasonally adjusted initial claims was 399,000, an increase of 13,000 from the previous week's revised figure of 386,000. The 4-week moving average was 403,500, a decrease of 5,000 from the previous week's revised average of 408,500. This is an indicator that our economy may be headed towards a falling GDP.

Next we will look at new orders for consumer goods. This is generally a pretty good indicator of the economy. If there isn't more requests for goods and orders being taken for products, then one can assume that the business' are not having to work more to fulfill those orders, thus in turn no overtime and possibly even layoffs will take place. Today's economic report suggests that new orders for manufactured durable goods in August 2003 decreased by $1.6 billion or. 9 percent from the month of July 2003. If this trend continues, it can lead to a recession.

Vendor performance is another economic indicator. Advance retail and food service sales for August 2003 were up $319.2 billion, or 0.6 percent from the month of July 2003. You wouldn't think that this fact would be true, but if the delivery of materials or orders are on-time, then this usually indicates a slack in business and isn't not good from an economic standpoint. New orders for capital goods are number five on the list. This might be cars, equipment or other investments. A decrease in this area can also mean that the people doesn't see a future in which it is presently worth investing in and can mean a recession may be ahead.

This figures are predicted by stock market prices, interest rates on homes, vehicles and business ventures. Building permits can also be a great economic indicator. The home ownership rate in the second quarter of 2003 is at 68.00 percent, it was higher the revised second quarter of 2002. The new home sales for August 2003 was also above July 2003 by 3.4 percent. Stock prices generally are the main and most identifiable indicator among the general public. The prices can change dramatically from one hour to the next, from the sound of the opening bell to the close.

Stocks rose on Monday, October 6, 2003, for the fourth session in a row as investors bet that the economy and corporate profits are on the mend and wait for the earnings season to heat up. This indicates that there may be an incline in the economy. Money supply, or the money that the nation has available, if decreased can show that the real GDP may be falling. Money is more important then any other part of our economy. If people hoard money and don't spend the money, then there will become a shortage of the money supply. This usually happens when the are higher taxes or a decline in the income.

The 2002 average household income stands at just a little less then 1 percent difference then compared to the 2001, this equaling out at about five hundred dollars less. Not much of a difference and we will have to watch he trend in this area. Interest spread, or the difference between the short term interest given and the long term interest rates are also a prediction of economic future. If there isn't much of a difference between these two interest rates then suggests that someone is being strict on the money policies and are taking a hard look at the direction the economy is headed. The last economic indicator to look at is consumer expectation. This can be a broad and general area to look at and can change dramatically.

Someone who is frightened about the future economy and wants to be less risky with their money tends to spend less, save more. They do this by investing differently or not at all. They may choose to buy bonds rather then stock. But if the future may seem bright and many opportunities arise people tend to spend more and that in turn causes the economy to generate a better outlook.

Not just one factor can indicate the future of the economy, but they are generally a good way to forecast the future of the economy. The basic rule is again to look at the trend of 3 or more factors, check to see if they rise or fall for at least three months in the same direction. If so, you can use this to see if the direction of the economy is going good or bad. We all take part in the economy in our own way even if we don't realize it. Just by buying a certain kind of product over another and the amount that we purchase, whether we buy stocks or bonds, or maybe if we decide to buy or rent our home. With the information I found about our recent indicators of the economy, I believe we may be in for a recession.

The trends seem to steer us that direction. But who knows, if we are more aware of it, and the public knows how to prevent it, we can by just spending a few more dollars on capital and consumer goods, and maybe the tax breaks and interest rate changes will encourage America to spend just a little more.