Economic Indicators Flashcards
You are a finance manager at an investment firm. The CEO has asked you to help train newly hired staff by explaining the difference between leading, lagging, and coincident economic indicators.
Prepare a memo to the new employees discussing the different kinds of indicators, and provide examples of each type of indicator.
Leading Economic Indicators.
-Measures of economic activity that generally occur before a change in the business cycle.
-Short-term predictors of aggregate economic activity.
-Examples: consumer expectations, initial claims for unemployment, weekly manufacturing hours, stock prices, building permits, new orders for consumer goods and for manufactured capital goods, and the level of the real money supply.
You are a finance manager at an investment firm. The CEO has asked you to help train newly hired staff by explaining the difference between leading, lagging, and coincident economic indicators.
Prepare a memo to the new employees discussing the different kinds of indicators, and provide examples of each type of indicator.
Lagging Economic Indicators.
-Measures of economic activity associated with changes that occur after changes in the business cycle
-Confirm elements of business cycle timing and magnitude.
-Examples: changes in labor cost per unit of output, the ratio of inventories to sales, the duration of unemployment, the dollar value of commercial loans outstanding, and the ratio of consumer installment credit to personal income.
You are a finance manager at an investment firm. The CEO has asked you to help train newly hired staff by explaining the difference between leading, lagging, and coincident economic indicators.
Prepare a memo to the new employees discussing the different kinds of indicators, and provide examples of each type of indicator.
Coincident Economic Indicators.
-Measures of economic activity that change at approximately the same time as the economy as a whole.
-Provide information about the current state of the economy.
-May be used to help retrospectively identify the timing of peaks and troughs of the business cycle.
-Examples: the number of employees on nonagricultural payrolls, level of industrial production, the current unemployment rate, and the level of retail sales.
