What are Economic Indicators?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 03 November 2019
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From time to time, many of us engage in the task of collecting data about the current condition of the economy as well as making projections about how the economy will look over a period of time. In order to properly analyze current conditions and figure out where we are going, it is necessary for us to consider a number of factors that impact how we buy and sell goods and services. Those factors or predictors are what we commonly refer to as business indicators or economic indicators.

In order to get a more accurate picture of the economy, it is important to consider a variety of economic indicators that touch on all sorts of segments of culture and society. There is the need to approach such indicators as the strength of various industries on a national and international basis, the gross national product (GDP) of the nation, the current landscape of the housing industry, and the current impact of inflation on goods and services delivery.


When it comes to housing, there are a number of subfactors to consider in order to obtain a true image of this economic indicator. The rate at which home ownership is increasing or decreasing is one point to ponder. Rentals of both houses and other forms of housing, such as apartments, condominiums, and mobile homes, and the current average rental rate is another consideration. The condition of the housing market goes a long way in helping to determine the financial health of a give locale and will definitely impact any view of the economy.

Business production is another key economic indicator. Retail sales are one of the best economic indicators of the confidence that the consumer currently has in the prevailing economic climate. A drop in retail sales can indicate that people do not think the time is right to spend money on non-essential goods and services. An increase in business sales and profits demonstrates that people are hopeful for the future and are willing to spend more of their disposable income.

On a global scale, economic indicators such as manufacturing output of a country are considered very important. Along with the actual output, there is the amount of those produced goods that are exported versus those that remain in the country. Related economic indicators would be the amount of imported goods and services, along with the stock market indices and the current rate of inflation or recession within the country.

The rate of employment also ranks as one of the more important economic indicators. The percentage of full time employed persons versus those that are currently without work, as well as the average weekly earnings across the board, help to indicate financial stability of national economy. Along with personal income averages for the country, there are also other economic indicators that go hand in hand, such as the current amount of credit card debt carried and the amount of generated income that finds its way into investments and savings.

Economic indicators are handy for assessing the situation of a local community, a state or province, a nation, or even the overall global economy. By taking into consideration a wide variety of economic indicators, it becomes much easier to make accurate projections of what the future holds.


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Post 2

My state provides information on the state economy in their yearly publishing. They use some of the same indicators mentioned here like employment, construction and sales. But they also look at utilities, transportation and energy.

I know that the national economy reflects state economies pretty well. But every state is different, each state's economy relies on different industries. So I always like to check out the state's findings as well.

Post 1

I wonder if some of these economic indicators are really as dependable as we think they are. My family and I often comment on retail sales and make an assumption on how the economy is doing. When I don't see as many people at the mall as previous years during holiday season, I know something is wrong.

But I've also heard that retail sales have to do with cultural habits too. Like they say that Asians are savers and Americans are spenders. If that's true, then it has little to do with the economy. But at the same time, even if that is true and sales go down compared to previous years, it still says something about spending power.

What do you think? Are retail sales a good indicator of how the economy is doing?

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