There are new economic findings, reports and information coming out on a daily basis. Between work, life, and everything in between there’s often zero to little time to pay attention to any of what the U.S. Bureau of Economic Analysis and the U.S. Census Bureau have to say.
We all know that the economy is going through a rough patch, and sometimes it can be a little taxing to attempt to understand exactly what the markets are doing. In case you want to dive deep into the financial foundation, here’s a quick, simple synopsis of some of the economic indicators that you might want to pay more attention to.
What is an Economic Indicator?
Economic indicators are simply just pieces of information, or statistics, about the economy. Closely following everything from trends in business to the stock market, economic indicators are released to help economists, as well as intrigued citizens, get a glimpse into where the future of the economy is heading.
Depending on if you’re into buying real estate, investing in stocks, or want to predict how to manage your finances through the ups and downs of the economy, it’s helpful to follow certain economic indicators.
Leading Indicators: Stocks and Real Estate Sales
When it comes to the complexities of the economic indicators, there are a few key aspects that the everyday citizen is going to want to pay attention to.
Leading indicators take place before the economy is inevitably affected. Whether you invest, own shares in your company or take general interest, the stock market is something that most people want to keep an eye on. The stock market falls under the category of a “leading indicator” because depending on its activity, economists are able to predict what type of impact it will have on the economy in the future.
Real estate is another leading indicator about the state of the economy. If people are buying houses, the economy will improve. The opposite is true if no one is involving themselves in the housing market.
Lagging Indicators: Pink Slips and Craigslist
Lagging indicators take place after the economy already changes. An example of this is the unemployment rate. After the economy suffers, it’s likely that businesses will lose money forcing them to lay off their workers, which in turn leads to increases in unemployment.
In contrast, if the economy improves, businesses will generally start growing, expanding, and be in need of more employees so employment rates will rise.
Coincident Indicators: Buildings and Shopping Bags
Coincident indicators change at the exact same time as the economy does, and are able to be seen through things like the Gross Domestic Product.
Personal income and the amount of industrial production that is taking place are also coincident indicators, because if people have more money to spend, they buy more land and do more expansion. If buildings are on the rise, it’s a good indication that the economy is too.
Recent Economic Indicators
In April, there was a large increase in personal income. Personal income increased .4 percent, or $54.4 billion. There were increases across the labor map, as salaries went up $24.4 billion. Goods producing services increased $5.8 billion, manufacturing went up $4.5 billion, and the service industry went up $18.6 billion. From this information, we’re able to tell that there was a slight increase of coincident indicators and leading indicators.
The economy still has a long way to go, but as of last month, economic indicators suggest that it could be on its way to turning around.
This guest post was written by Go Banking Rates, bringing you informative personal finance content and helpful tools, as well as the best interest rates on financial services nationwide. Follow them on Twitter at @GoBankingRates and on Facebook at /GoBRates. Go Banking Rates is not affiliated or endorsed by LPL Financial.
photo credit: SEIU Local 1
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