Economic Indicators Research Paper
Research Paper Economic Indicators
Economic indicators can be defined as statistics or information that leads to a description of the economic or market activities of a country. Economic analysts use information available in the market to gauge the economic performance of a certain period and use these past data to predict the future performances (Franco, 2010). Some major economic indicators for most countries include the gross domestic product, unemployment rates, stock market or the currency rate, inflations, consumer leverage ratio, consumer price index among others. Some of them are discussed below.
Gross domestic product (GDP) can be described as the overall market value of the final goods and services officially produced in a country within a given period of time, mostly a year’s time. The value of these goods produced in one year helps in the determination of the citizens’ standards of living. In calculation of the gross domestic product of any country, there are three methods to be used which are the production or output approach, the income approach and the expenditure approach (Franco, 2010).The production approach deals with the addition of all the products that are manufactured or created in the local firms. The costs related to the manufacture of all the final goods are also taken to consideration. The income method deals with the income of the producers of the goods which is supposed to be equal to the value of their product they manufacture. Expenditure method on the other hand is addition of all the expenses that the households and consumers have used up in the acquiring of the goods and services.
Consumer price index, rather known as the inflation rate is one where there is constant rise in the prices of commodities which is brought about by the increase in money supply or weakening of the local currency. The inflation rate will help analysts be able to explain the wages and salaries rates in an economy. High inflation rates calls upon the central government to reduce the money in circulation by increasing the banks fixed deposits or by selling off their securities to the public. The activities of the stock market will entail the buying and selling of securities. Many activities in the market suggest that people have money to invest which is an indication of sound economy will minimal activities indicate harsh economic activities.
Nonfarm payroll employment entails the addition of all the total number of paid United States workers of any business types but excluding any general government employees, private household employees, employees in the nonprofit making organizations and farm employees. In the United States, it makes up to eighty percent of the total GDP therefore this will help in determination of the country’s economic activities and performance. High nonfarm payroll employment means a high GDP therefore good or pleasant economic stability and increased standards of living (Smith, 2004). Industrial production reports will also be used to show what amount of goods has been manufactured in a given year for specific firms. A high number will indicate a sound and effective economic system while a low number indicates low economic developments.
Another very common indicator in the U. is the housing initiatives which are mostly reported in the mid month by the U.S. Commerce Department. It is used to indicate the economic strength. These reports explain the building permits issued in regards to housing launches and completions for all home builders (Smith, 2004).A high number will indicate improved standards of living where people have enough income for building their homes thus increased economic activities. Surveys of homebuilders nationwide are used to compile the data.
Retail sales include the total amount of goods sold by the retailers. Retailers are small sellers of goods rather than selling in bulk. Both retailers and wholesalers are used to distribute and sell goods therefore the amount recorded by both reflects in the GDP. A high value indicates economic soundness.
Franco,C.E., (2010). “Economic Indicators in economy” 2nd ed. Encyclopedia of business today, Newyork. USA,
Smith,S.M., (2004). :Economics: Business Principles in action.” Upper Saddle Philadelphia, Jersey p. 315.