Economic Indicator Roundup: Monitoring the state of the economy and finance

My vision is to have a dashboard of sorts composed of all the different indicators that I like to follow.  I’d like to update them periodically and share them with you.  I hope to have a brief explanation of why each one may be useful, along with a blurb about what the most recent indicator reading may mean.  For now, I’ll try to add to my roundup one by one to avoid having to wait forever before I create a page as ambitious as what I’m picturing.

USA Today / IHS Global Insight Economic Outlook Index (link here)

This index takes 11 indicators that are believed to be “leading indicators” and combines them into an estimate for economic growth.  “Leading indicators” are those that are able to signal what is going to happen in the economy in advance of the actual change.  For example, one of their 11 indicators is “hours worked.”  Don’t pay attention to the actual number itself, because it doesn’t actually translate to hours worked – only reflects the change in weekly hours worked for each employee.  It has been shown that when this measure increases, the economy generally performs better a few months later.  So, these changes are “leading” the changes in the real measure of interest.

So, this overall index forecasts a Real GDP annualized growth rate (same as the kind that is reported every quarter by the government).  One catch is that when you see a forecast for one of the months, it represents the Real GDP growth rate for a 6-month period leading up to that month, not just a quarter like the regular reports released by the government.  So, it’s a little broader measure of economic activity than the official GDP report.  Nevertheless, it is a nice index to track.

Latest Reading: Gradually decreasing GDP growth rates through Dec 2010, ending with 2.5%.  This actually wouldn’t be terrible, but it still represents a slower-than-average growth rate for our economy.  It wouldn’t be enough to bring down the unemployment level much, if at all, by the end of the year.  But the one bit of good news is that this index is not forecasting a “double-dip recession” where GDP growth would turn negative before we’re officially out of recession.

Economic Indicator Roundup (August 5, 2010)

NOTE: You may be reading an outdated analysis.  Please visit my latest economic indicators roundup.

Related posts:

1. Indicator: United States GDP up 2.4% in Q2 of 2010