Economic Measures
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Key Economic Indicators
The B/NV News Summary has changed over the past few issues. The original goal was to pour over economic news reports from various sources, Wall Street Journal, Stratfor, and Money Forecast Letter, looking for noteworthy news items summarizing economic and business information. Articles listed in previous issues were selected from these sources based on my view of what was important. Now these sources are great and the articles are interesting and informative but still rely on filtered information, even if filtered by me. Looking at monthly changes in key economic indicators provides the most reliable, unfiltered, economic news.
The United States of America is the largest most successful economy in the history of the world. Its economic indicators even during an economic downturn are miles ahead of its next largest rivals. “Even after the declines to date, the U.S. economy stands as big as all the nations of Europe put together.” Monitoring, five key economic indicators, therefore, provides an unbiased glimpse at U.S economic performance.
The key economic indicators selected provide a view into the U.S. economy and how it is reacting to current changes in relation to the past few months or quarters. These reports are based on the latest, or revised, federal government data. The first measure Consumer Price Index (CPI) tracts the changes in prices paid by consumers for a representative basket of goods and services. CPI measures inflation or deflation. Personal Income (PI) is the income received by every person from all sources and provides a measure for our standard of living.. Unemployment Rate (UR) as reported here represents the average unemployment rate reported by each state including the District of Columbia and Puerto Rico. These three indexes track the economic impact on individuals or what economists would call a micro-economic view.
The last two indexes track economic data on a larger basis, macro-economic. These two indexes cover oil prices and gross domestic product. The price of West Texas Intermediate Crude (WTI) also known as Texas Light Sweet, is a type of crude oil used as a benchmark in oil pricing and the underlying commodity of New York Mercantile Exchange's oil futures contracts and is based on a 42 gallon barrel. The price of a barrel of oil has a direct impact on the price of gasoline which is included in the “representative basket of goods” use to calculate CPI.
The last index, Gross Domestic Product (GDP) measures the total value of all final goods and services produced by the U.S. economy. It is the only index reported on a quarterly basis with October representing the 4th or last quarter of the year. GDP is used by the White House and Congress to prepare the Federal budget, by the Federal Reserve to formulate monetary policy, by Wall Street as an indicator of economic activity, and by the business community to prepare forecasts of economic performance that provide the basis for production, investment, and employment planning.
Remember, the goal is to provide you with meaningful business and economic information that is easily understood and has meaning. If there is a particular economic index that you feel is important and would like to see it track regularly, let me know and we’ll work it in. My goal is to provide a useful source of business and economic information that you can use. We provide you decide!
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Library of Congress Cataloging-in-Publication
Business/News & Views® / by David. W. Weatherholt
ISBN: 978-0-9823041-1-2 (electronic format)
Published in the United States of America through www.waconsult.com
Published in an electronic format by Weatherholt & Associates, LLC
First Trade Publishing: October 2008
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