Australian_Economic_Indicators_ 2024.ppt

Economic Indicators

1. Economic Indicators
Okay, I should pay attention to the
business cycle, but how do I know
which direction it is going in?

2. Economic Indicators
•Predicting the business cycle is tricky.
Often the economy does not do what
economists expect.
•Looking at lots of indicatorsprovides them
a feel for what is going on and an idea of
how to prepare for the future.
•Def. Trends in the economy which tell
economists where the business cycle is
going and where it has been.

3. Three Types of Indicators
Leading Indicators
(where the cycle is going)
Coincident Indicators
(where the cycle is now)
Lagging Indicators
(where the cycle has been)

4. Leading Indicators
•Def. Economic activity
that happens prior to
(before) a change in the
economic cycle.
•These are predictors of
where the economy is
going next: Expansion
or contraction.

5. Leading Economic Indicators
Indicator
•Average weekly
initial claims for
unemployment
•Stock Prices
Significance
•Reflect layoffs and
new hires(more
unemployment,
contraction. Less
unemployment,
expansion)
•Reflect Investor
attitudes(rise
=expansion, fall=
contraction)

6. Leading Economic Indicators
(cont.)
Indicator
•Building Approvals
•Index of consumer
confidence (a survey
of how people feel
about the economy)
Significance
•Shows confidence in
the economy, will
lead to increased
building activity
•Reflects changes in
consumer attitudes
about the future.

7. Coincident Indicators
•Def. Information that is used to measure
economic change as it happens.
1.GDP
2.Total industrial production
3.Job adverts
4.Retail sales
5.Motor vehicle sales

8. Lagging Indicators
•Def. Economic activity that change after
the business cycle expands or contracts.
1.Interest rates banks charge on loans
2.Consumer debt
3.Inflation
4.Unemployment rate