Numbers #9: U.S. Economic Indicators

All you ever wanted to know about economic indicators! Well, maybe. 

Here’s the list of official economic statistics supplied by the U.S. Census Bureau:  http://www.census.gov/economic-indicators/calendar-listview.html.

Before we get any further into the nitty-gritty of the numbers, here are some definitions from the folks at Investopedia.com:  http://www.investopedia.com/terms/e/economic_indicator.asp?layout=infini&v=5C&adtest=5C&ato=3000

As if putting the raw numbers into some context isn’t difficult enough, these numbers are not “static”, in other words they can change. “The powers to be” can revise them up or down! It’s not a whimsy thing; at least I don’t think so. Factors, when seen in the “rear view mirror” look differently, so that’s why you may hear about “adjusted” economic numbers. It happens frequently! A frequent example of an adjusted economic indicator is the number of unemployed. This number is calculated by the U.S. Department of Labor: http://www.bls.gov/

There are three categories of economic indicators:

  • Leading economic indicators
  • Coincident economic indicators
  • Lagging economic indicators

Investopedia.com, as usual, does a good job of defining them: http://www.investopedia.com/ask/answers/177.asp

Bankrate.com simplifies it a little bit by highlighting five economic indicators:

  1. Personal income and outlays
  2. Retail sales
  3. Consumer price index
  4. New-home sales
  5. Employment

Read more: http://www.bankrate.com/finance/investing/5-economic-indicators-to-watch-1.aspx#ixzz49Q6YiYHN

The Conference Board also publishes many economic indicators:

“The composite indexes of leading, coincident, and lagging indicators produced by The Conference Board are summary statistics for the U.S. economy. They are constructed by averaging their individual components in order to smooth out a good part of the volatility of the individual series.  Historically, the cyclical turning points in the leading index have occurred before those in aggregate economic activity, cyclical turning points in the coincident index have occurred at about the same time as those in aggregate economic activity, and cyclical turning points in the lagging index generally have occurred after those in aggregate economic activity.”  Web site:  https://www.conference-board.org/data/bci/index.cfm?id=2160

Here’s a white paper written by the Federal Reserve Bank of Kansas City. It highlights: “Why  do  central  banks  collect  and  analyze  so  many  indicators?  To understand the answer, it is first important to recognize that monetary policy affects economic activity and inflation with long and variable lags.”

https://www.kansascityfed.org/publicat/econrev/pdf/3q01kozi.pdf

This “stuff” may be boring but it is what “drives” the political and economic policies of the United States and other countries of the world. When the politicians talk about “free trade” or interject trade policies in the country’s economic system, it affects “the numbers.” Whenever the Federal Reserve Bank interjects a change in monetary policy it affects “the numbers.” Literally nothing in our age is invoked as economic, wage, banking, foreign, national, or other “labeled” policy that does not affect other economic indicator numbers, which are the life-line indicators of our nation’s health. In an earlier posting, By the Numbers #3: Those Naughty Market Indices, They Move Up and Down!, I referenced a life-support monitor used in a hospital as a way of identifying and monitoring the health of the stock market. I guess the same analogy can be used for monitoring the nation’s economic ‘state of health”.

What’s scary is that the “life monitor” came so close to “straight-lining” in the year 2009. Below are posts that I wrote in 2015 that reference the events and “stop-gaps” that were instituted and invoked to avoid the collapse of the U.S. economy in 2009. The documentary producers  at “Frontline” did a great job of summarizing many of these actions and events.

There are several postings involved, enjoy viewing them separately as each one is an hour-long documentary. Each posting link is indicated in the posting:  Great Recession Retrospective Redux

Popcorn optional, actually a scotch and water might be more appropriate while viewing!

Cheers!

P.S. If you’re up to it, here’s  “A Guide to Tracking the U.S. Economy” written by Kevin L. Kliesen of the Federal Reserve Bank of St. Louis (dated 2014):

https://research.stlouisfed.org/publications/review/2014/q1/kliesen.pdf

 

 

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