Economic Indicators Definition
Economic indicators are macroeconomic data that describe the condition of an economy. So, use them to determine whether an economy is prosperous and expanding or troubled and contracting.
For example, a high unemployment rate and a contracting GDP are considered signs of a troubled economy, such as a recession. In comparison, high levels of consumer confidence and rising stock market indexes are signs of a prospering economy.
Economists, investors, and policy makers use economic indicators to discern the health of the economy. Then they try to forecast changes in the business cycle.
Types of Economic Indicators
- Stock prices
- Building permits
- Average weekly initial claims for unemployment insurance
- An index of consumer expectations
Lagging indicators appear after the completion of economic trends and changes in the business cycle. Use them to analyze the economy in retrospect or to confirm other economic data. Examples of lagging indicators include the following:
- Average duration of unemployment
- Average prime rate charged by banks
- Change in labor cost per unit of output
Economic Indicator Sources
The most reliable and closely-watched economic indicators are published by government or non-profit organizations, such as the Conference Board, the Federal Reserve System, the Bureau of Labor Statistics, and other organizations. These organizations issue economic data periodically.
If you want to track your economic indicators, then download your KPI Discovery Cheatsheet today.
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