Economic+Indicators

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 * =ECONOMIC INDICATOR OF THE WEEK = ||  ||
 * ====Assignment rubric: ====

 [[file:EIWrubric.doc]]
||  || ====**CALENDARS**: ====

//[|NASDAQ U.S. Economic Calendar]//
|| =Construction Spending= The Construction Spending indicator shows viewers how much money the United States is giving the construction companies to spend. In basic terms, the government gives a certain amount of money to construction companies each year. It shows this on a yearly basis as well as on a monthly basis. Also a part of the report is a graph and table that shows Private Construction spending for residential and nonresidential. Each section affects the total construction figure, Private residential or nonresidential and Public in a way that cannot be easily or always accurately calculated. Because the monthly numbers for this indicator are subject are extremely volatile, it does not particularly affect the market much. Only the figures that last a minimum of three months can be seen as significant. These numbers are most important though in calculating the investment component of the quarterly GDP. Private construction spending alone takes up about 7% of the GDP. The most interesting part about this indicator recently is that it was predicted to descend further this month (about -1.5%) and instead, to the public’s happy surprise, it increased 0.8%. The annual rate for public construction spending declined -0.6% to $311.4 billion. This is the second straight month where the figures had showed a positive trend, which gives economists hope for the GDP and recovery trade. http://www.investopedia.com/terms/c/constructionspending.asp http://www.hgtvpro.com/hpro/nws_econ_fin_econ_ind/article/0,2624,HPRO_26527_5943124,00.html
 * Date of Announcement:** June 1, 2009 at 10:00 ET
 * Definition:**
 * Consensus Prediction for April:** Economists were predicting that numbers would decline 0.8%. Instead though, the numbers went up 0.8%. The next report on Construction Spending will come out on July 1, 2009 and will cover the month of May. No predictions for May have been made yet.
 * Most Recent Figure:** 0.8% for total construction
 * Source**: http://www.briefing.com/Investor/Public/Calendars/EconomicReleases/const.htm

=Consumer Price Index= =Date of Announcement: April 15 at 8:30 ET= =Definition:= The consumer price index (CPI) is an economic indicator that measures the price level of market goods and services that consumer’s purchase. Because it is the most widely cited inflation indicator, it is used to calculate the cost of living for government programs as well as in private labor agreements. The CPI has been criticized for overstating inflation because it does not adjust for substitution effects nor does it reflect price change in new technology goods. It can be greatly influenced by movement in energy or food prices. The core CPI doesn’t include food or energy prices, so it is also important to look at. The core CPI is looked at yearly by economists to see the underlying inflation rate. ==

=Current Condition and Predictions:= The CPI is back on the rise after a few months of decline. In February, the CPI rose to 0.4% which was higher than the expected 0.2 or 0.3%. The energy index had a big role bringing the CPI up to what it is now. Currently, the CPI is much lower than it has been in the past. When the CPI is low, it is good news for the buyer because inflation is low and goods are cheaper. However healthy economic conditions are characterized with a CPI that is typically from 3 to 5% because suppliers make high profits and the economy is seen as growing. The consensus for the month of March is that the CPI will drop to 0.2%. This is still not deflation, but the rate at which prices are rising has dropped. ==

=Trade Balance=
 * Date of Announcement:** April 10 at 8:30 ET


 * Definition:**Trade balance is an indicator that encompasses both the imports and the exports of the United States. In addition to the material goods normally thought of as imports or exports (ie. microchips, oil, etc.), trade balance also takes into account services (like money management). Trade balance is relatively simple to analyze since it is expressed in terms of dollars, which is one reason for its popularity as an indicator. The export section of this indicator is watched more closely than the import section because any information gained by looking at our imports can usually be found sooner through some other consumption indicator. A strong showing in exports can mean that U.S. goods are fairing better on the world market because of some new innovation, decrease in price, etc. or that foreign economies are stronger and are spending more.


 * Current Condition and Predictions:** The current trade balance for the United States is down, though it has been since at least 1994. The current deficit is around 36 billion dollars, which is actually a rise from previous data. January 2006’s balance reached nearly 68 billion dollars, and since the beginning of the economic crisis the balance has shot upward rapidly. Both imports and exports have been dropping rapidly for the past six months, but imports have been dropping faster than exports during this time, causing a decrease in the trade balance deficit. The current prediction for the next trade balance deficit is 36.5 billion dollars, a slight increase in deficit from last months, most likely from an increased number of imports coming into the country.

= = =**Consumer Confidence**=
 * Sources:** http://www.briefing.com/Investor/Public/Calendars/EconomicCalendar.htm
 * Date of Announcement**: March 31 at 9:00 ET


 * Definition**: Consumer Confidence is an indicator conducted by the Conference Board to survey the sentiment among Americans in regard to economic stability. The index is comprised of two sub-indexes: 60% of the index is a measure of the sentiment among Americans in how they view the economic conditions of the future, whereas the other 40% is a measure of Americans’ view of the current economic situation. The index is derived from a monthly poll of 5,000 households.
 * What’s happening**: The Conference Board Consumer Confidence Index, which had decreased moderately in January, declined in February, reaching yet another all-time low. The Index now stands at 25.0 (1985=100), down from 37.4 in January. Looking at the sub-indexes, the “Present Situation” Index declined to 21.2 from 29.7 last month. The “Expectations” Index decreased to 27.5 from 42.5 in January.


 * Significance as an Economic Measure**: Consumer Confidence is often overrated in terms of its predictive value and correlation with economic activity. It is considered that only index changes of at least five points are significant; most small changes in the index are overwhelmingly superfluous. Unfortunately, sentiment does not correlate with consumer spending and, as a result, Consumer Confidence has very little predictive value. Sentiment more closely reflects already known factors such as rising gas prices and unemployment rates. This aside, Consumer Confidence is a valid indicator of the psychological state of Americans toward the financial environment and its future.

http://www.briefing.com/Investor/Public/Calendars/EconomicReleases/conf.htm http://www.conference-board.org/economics/ConsumerConfidence.cfm
 * Sources:**

**Initial Unemployment Claims**
 * Date of Announcement:** March 19—8:30 ET

Initial unemployment claims measure the number of Americans that have filed for initial unemployment benefits. This statistic is released by the Department of Labor every week, but most economists use a four-week average for more accurate results. Typically, changes in unemployment claims must be over 30,000 for economists to treat it as a meaningful change in the state of the economy. For the week of March 6, an increase of 9,000 initial claims occurred, resulting in a total 654,000 claims. The initial unemployment claims statistic cites only those who filed for unemployment, which can at some times be significantly lower than those who actually lost their jobs. However, a more concerning fact is the continuing claims statistic, which rose 193,000. This means it’s taking Americans longer to find a new job.
 * Definition:**


 * Most Recent Figure:** 654,000
 * Consensus Prediction for the week of March 13:** 654,000
 * Actual Figure for the week of March 13: TBA

Sources:** http://www.briefing.com/Investor/Public/Calendars/EconomicCalendar.htm http://www.dol.gov/opa/media/press/eta/ui/current.htm http://anasdaq.econoday.com/byshoweventfull.asp?fid=437658&cust=nasdaq&year=2009

**Existing Home Sales**


 * Date of Announcement:** March 25—10:00 ET


 * Definition:**

The Existing Home Sales report provides a measure of the level of sales of existing home sales. These figures include condos and co-ops, in addition to single-family homes; it does not look at newly built houses or the sale of new houses. The report is considered a decent indicator of activity in the housing sector, however, it is a lagging indicator as it tends to react after a change in mortgage rates. This indicator is thought to be a good measure of demand in the real-estate sector. Sales are also determined by the level of pent-up demand for housing - immediately after a recession, sales are typically quite strong due to the demand which accumulated through the recession. Aside from total sales, two other indicators are worth watching in this report -- the inventory of homes for sale and the median price. The inventory of homes for sale at the current sales pace is the inventory/sales ratio of the housing sector. For example, a 7.0 figure for inventory/sales indicates that the supply of homes for sale would be depleted within seven months at the current sales pace.

The main indicator for this presentation is the “Existing Home Sales” or the total number of existing home sales. However, the two other indicators in the table serve a similar purpose. The “Months Supply” is the inventory of homes for sale. The lower this number decreases, the greater the need for new housing starts. The “Median Price” is quite self-explanatory. It provides a year/year change and indicates inflation in home prices.


 * Most Recent Figure:** 4.49M Jan. 2009
 * Consensus Prediction for February:** 4.45M
 * Actual Figure for February:** 4.72M
 * Outlook:** The prediction for February was that the figure would decrease, while the actual figure increased significantly. There was a clear dip in the home sales in January and has direct correlation to the stock market dip as well. Some economists are being optimistic and are saying that the economy is on the rebound and that late February and early March was "rock-bottom." This figure is also influenced by the seasons so now that spring has arrived, there can be the assumption that the figure will continue to rise.

http://money.cnn.com/2009/02/25/real_estate/existing_home_sales/ http://www.briefing.com/Investor/Public/Calendars/EconomicReleases/exist.htm
 * Sources:**

**Non-Farm Payroll**


 * Date of Announcement:** March 6 – 8:30 AM


 * Definition:**

The Non-farm Payroll is a statistic that measures the change each month in the number of paid U.S workers excluding farm workers. Farm workers are not included in this economic indicator because they are often hired seasonally and therefore would disrupt the month-to-month trends. During normal non-recessional times, the change from the previous month is typically between +10,000 and +250,000 workers. The statistic is a fairly accurate indicator of the direction of the economy – for example: If the non-farm payroll increases by 300,000, it means that businesses are expanding and as a result, the GDP will likely increase. It also means that more people will have more money to buy goods. A decrease in non-farm payrolls usually corresponds with increased unemployment and indicates that less people have less money to buy goods.

http://www.briefing.com/Investor/Public/Calendars/EconomicCalendar.htm http://www.investopedia.com/terms/n/nonfarmpayroll.asp http://en.wikipedia.org/wiki/Nonfarm_payrolls
 * Most Recent Figure:** -598,000 Jan. 2009
 * Consensus Prediction for February:** -650,000
 * Actual Figure for February:** -651,000
 * Outlook:** The prediction for February was right on the money. Employment conditions have been steadily declining since August, and the past three months have shown decreases in the non-farm payroll of well over 600,000. Economists are not optimistic about this trend improving within the next few months.
 * Sources:**

Sample

=**GROSS DOMESTIC PRODUCT (GDP)** =

**Date of announcement:** January 30, 2009
====**Definition:** GDP is one of the broadest measures of overall economic performance. It is calculated by adding the total value of a country's annual output  of goods and services. GDP = private consumption + investment  + public spending  + the change in inventories + ( exports  - imports <span style="color: rgb(73, 11, 91);">). Analysts see change in GDP as a major indicator of the direction of the economy as a whole. The GDP is calculated by the [|U.S. Bureau of Economic Analysis]. ====

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Sources:http://www.nasdaq.com/asp/econodayframe.asp?page=http:anasdaq.econoday.com/byweek.asp?cust=nasdaq) http://www.briefing.com/Investor/Public/Calendars/EconomicCalendar.htm) http://www.economist.com/research/economics/)