Economics
Macroeconomic indicators
Macroeconomic indicators are statistics that provide insight into the overall health and performance of an economy. They include measures such as GDP, unemployment rate, inflation rate, and consumer confidence. These indicators are used by policymakers, businesses, and investors to assess the current state of the economy and make informed decisions.
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10 Key excerpts on "Macroeconomic indicators"
eBook - ePub- Daniel Beland, Martin B. Carstensen, Leonard Seabrooke, Daniel Beland, Martin B. Carstensen, Leonard Seabrooke(Authors)
- 2018(Publication Date)
- Taylor & Francis(Publisher)
Studying Macroeconomic indicators as powerful ideas Daniel Mügge ABSTRACT Macroeconomic indicators – especially inflation, gross domestic product growth, public deficits and unemployment – stand central in economic governance. Policy-makers use them to assess their economies’ health. Citizens evaluate politicians’ performance using them as yardsticks. But these indicators defy simple definition, and the formulae underlying them have varied across countries and over time. Particular choices have fundamental distributive consequences. This research agenda outlines how we might study Macroeconomic indicators as powerful ideas and ask: why do we measure the economy the way we do? It illustrates the myriad ways in which Macroeconomic indicators are embedded in contemporary social and political life, and it outlines how we can uncover both what power rests in these indicators and who has power over them. After path-breaking scholarship has demonstrated how consequential these indicators are, it is imperative to understand better which forces determine our choice for one indicator formula over its alternatives. INTRODUCTION We live in an age of numbers. Performance indicators and rankings pervade domestic politics. Not only economic policy, but also education, health care, public safety and environmental protection are governed through indicators and quantitative assessments. Policy-makers and politicians use indicators to design and assess policies, not least in comparison to other countries (Davis et al. 2012a; Fougner 2008; Krause Hansen and Mühlen-Schulte 2012; Krause Hansen and Porter 2012). Media outlets report growth or unemployment figures widely, stock markets jump or fall on their publication, and citizens use indicators to gauge whether policies – and the politicians they hold responsible for them – are serving them well
Available until 25 Jan |Learn more- Rob Dransfield(Author)
- 2013(Publication Date)
- Taylor & Francis(Publisher)
10 Economic indicatorsChapter Outline10.1 Introduction10.1 Introduction10.2 What are economic indicators?10.3 Indicators that show the growth of the economy10.4 Employment indicators10.5 Inflation indicators10.6 Population indicators10.7 The interest rate10.8 The exchange rate10.9 SummaryChapter ObjectivesAfter carefully reading and engaging with the tasks and activities outlined in this chapter you should have a better understanding of:- The importance of economic indicators for economists and business analysts
- Measurements that are used to record the growth of the economy
- Key measures of employment and unemployment and what they tell us about economic efficiency
- How inflation can be measured through the consumer price index
- The significance of the dependency ratio for a growing economy
- The importance to business of interest rates
- How the exchange rate affects an economy and businesses
- The importance of other economic indicators
Macro-economic analysis involves working with economic indicators to find out what changes are taking place in important economic variables and to get a better understanding of the relationship between these variables. Some of the most useful economic indicators are constructed from data collected by the Office for National Statistics.This chapter outlines the nature of some of the key indicators and shows what they measure. For example, changes in gross domestic product (GDP) can be used to measure economic growth and changes in the consumer price index can be used to measure inflation. Studying changes in key economic indicators will give you a much better grasp of fundamental changes taking place in the economy. Business analysts should regularly monitor economic indicators to get a better understanding of changes taking place in the economic environment.10.2 What are economic indicators?Economic indicators are things that can be measured that tell us something about what is happening in the wider economy. Just as in a car you have gauges showing the amount of petrol in the petrol tank, the oil level and the engine temperature, so too we have indicators which show the overall growth of the economy, the level of inflation, the unemployment level and so on. These indicators are very helpful to economists and to analysts planning the strategy of a business.
eBook - PDFMacroeconomics for Business
The Manager's Way of Understanding the Global Economy
- Lawrence S. Davidson, Andreas Hauskrecht, Jürgen von Hagen(Authors)
- 2020(Publication Date)
- Cambridge University Press(Publisher)
1 Macroeconomic Concepts and Indicators This chapter is all about a nation’s macroeconomy – it introduces the key concepts and indicators business managers, policymakers, and analysts look at and talk about when they describe the state of a nation’s economy and diagnose whether or not it is healthy, provides new business opportunities, or needs some policy intervention for improvement. To understand the macroeconomic environment you and your business operate in, you want to know the relevant terms, understand the concepts, and know what indicators to look at. A firm’s revenue in any given year is a result of a combination of forces that are directly related to the company, its industry, and the domestic and international macroeconomic environment. Depending on the firm and the year, these factors might alternate in importance. In some years, macroeconomic factors might not be very important; but in others – particularly at the beginning or end of a recession – changes in macroeconomic conditions can be very important. Furthermore, firm and industry-specific forces tend to lose and macroeconomic factors tend to gain prominence the more one looks into the future. For investment projects with time horizons of five, ten, and even more years, information about whether the general economy is going to grow or not, whether interest rates will be high or low, whether prices in general will be rising at a fast or a low pace is crucial. It is, therefore, important for a successful business manager to understand the macroeconomic environment his or her business is operating in. He or she must be able to interpret current and past data and developments, to understand current and past government policies, and to form expectations about future developments as an input to his or her business strategy. The purpose of this book is to enable you to do that. As you will see, some of the material you are going to read sounds pretty technical.
eBook - PDF- John Adams, Linda Juleff(Authors)
- 2017(Publication Date)
- Red Globe Press(Publisher)
Clearly these two sets of performance measurement will be interconnected, but it is nevertheless useful to identify key indicators within each. These provide analysts with the type of infor-mation needed to form forecasts and ‘views’ of the likely future performance of the economy as a whole and of individual firms within it. Both types of analysis are very important for policy decisions and act as key information for shareholders and potential investors. For these reasons the business of analysing stock market trends, company prospects and general economic prospects has become an industry in itself. First we can look at indicators rele-vant to the performance of the economy as a whole. ■ 3.3 Macroeconomic Performance Indicators What is good and what is bad performance in an economy? This appears a very straightforward question but in fact it begs many other questions. For example, one sector of an economy may be booming in terms of investment, produc-tivity and employment while another is in decline: this was the case in the UK in the early 1990s when the service sector was expanding and manufacturing production contracting. We are sure you can think of many examples for your-self of growth sectors and declining sectors. It is also possible for real national income itself to be growing while unemployment is increasing! Depending very much on your personal perspective, these contrasting situations represent either a ‘good’ or a ‘bad’ performance. It is, however, vitally important that Q2 managerial economics for decision making 56 when we are concerning ourselves with the question of economic performance at the national economy level it is the national economy and not some part or parts of it which is being assessed. It therefore seems reasonable that at least one performance indicator to be used at this level is real national income itself.
eBook - PDF- Rhona C. Free(Author)
- 2010(Publication Date)
- SAGE Publications, Inc(Publisher)
These aggregated variables do not directly reveal all of the components that constitute the aggregates, such as the individual composition of the output, which means that many of the details are effec-tively hidden from policy makers. Third, the measurement of the variables themselves is imprecise. For example, there is no universal way to capture overall inflation. Even if accurate data on all prices could be accurately deter-mined, the relative weighting scheme for determining which goods and services should contribute the most and least to the overall index is entirely up to the individual or organization constructing the index. The primary reason for gathering and analyzing macro-economic data is to aid in making decisions. Although the difficulties in assessing economic performance are formi-dable, there are some commonly accepted concepts that can be used. This chapter integrates these concepts to form a comprehensive approach. Theory and Concepts Relating to Economic Performance and the Business Cycle Macroeconomic performance refers to the behavior of the entire economy. Economies follow a cyclical pattern, which is referred to as the economic cycle, or business cycle. The measurement over this cycle by macroeconomic data is the result of aggregation, which means combining many individual units into one overall economic unit. Although this has the downside of hiding the measurements of the individual components, it is necessary because the data must be combined to be useful. Because most markets tend to move in unison across the business cycle, much of the data 297 298 · MACROECONOMICS Time Real GDP Figure 29 .1 The Business Cycle NOTES: The first panel shows the phases of the business cycle along with Y* cycle as a leading indicator of economic performance.
- Steven A. Greenlaw, Timothy Taylor, David Shapiro(Authors)
- 2017(Publication Date)
- Openstax(Publisher)
How is the Economy Doing? How Does One Tell? To determine the state of the economy, one needs to examine economic indicators, such as GDP. To calculate GDP is quite an undertaking. It is the broadest measure of a nation’s economic activity and we owe a debt to Simon Kuznets, the creator of the measurement, for that. The sheer size of the U.S. economy as measured by GDP is huge—as of the fourth quarter of 2016, $18.9 trillion worth of goods and services were produced annually. Real GDP informed us that the 2008–2009 recession was severe and that the recovery from that recession has been slow, but the economy is improving. GDP per capita gives a rough estimate of a nation’s standard of living. This chapter is the building block for other chapters that explore more economic indicators such as unemployment, inflation, or interest rates, and perhaps more importantly, will explain how they are related and what causes them to rise or fall. Chapter 5 | The Macroeconomic Perspective 131
eBook - PDF- Renaud Gicquel, May Gicquel(Authors)
- 2013(Publication Date)
- CRC Press(Publisher)
Given the multiple forms that economic activity can take, there is still no faithful and unbiased standard measurement. Table 3.1 Share of the main regions in the world population. 2010 2030 2050 Asia 60.3 59.2 57.2 Africa 15 18.3 21.8 Europe 10.6 8.7 7.6 Latin America 8.5 8.3 8 North America 5.1 4.9 4.9 Figure 3.1 World population. Macroeconomic indicators and accounting of energy 61 One of the most commonly used indicators is the Gross Domestic Product (GDP), which is an aggregate indicator measuring the total final output of goods and services of a given national economy. The Gross National Product (GNP) is also commonly used, as it is more representative of the national wealth generated during a year. The gross domestic product is defined as the sum of the added value of each economy branch, increased by the VAT (Value Added Tax) on products and tariffs. In this definition, the branches of the economy are all production units producing the same product category, and the added value is the difference between the value of goods or services produced by a company and the goods or services used for their production (“intermediate consumption”). This accounting method allows one to account only once the added value by each participant in the production process of a complex good. By adopting this convention, it is possible to measure the level of economic activity of a country, but it is not fully satisfactory, for two main reasons: • GDP measures all the activities giving rise to monetary exchange, be they useful or not: for example, when the number of car accidents or medical costs increase, the GDP grows, etc. • GDP only measures what is paid and accounted for, so that everything that is not accounted for is ignored (craftsmanship or volunteer work, including at home, “free” use of natural resources, pollution, etc.).
- Anne Dolganos Picker(Author)
- 2007(Publication Date)
- Wiley(Publisher)
This has led to large differences in the unemployment rate as calculated by Eurostat and the national rate. An Overview of International Economic Indicators 125 3% 4% 5% 6% 7% 8% 9% 10% Spain Portugal Netherlands Italy Ireland Greece Germany France Finland Belgium Austria EMU Australia Japan U.S. FIGURE 8.4 Unemployment rates vary from country to country within the EMU. The United States, Japan, and Australia are shown for comparative purposes Source: Eurostat and Haver Analytics. Employment Employment data are viewed as the more important indicator by most investors. Employment means that consumers will have money to spend. And since consumers make up the largest segment of most economies, it is important (obviously) that they earn wages so that they can purchase goods and services. Employment data count the number of paid employees working part time or full time in a nation’s business and government establishments. Employment gains or losses are relevant only when considered alongside population and labor force numbers. Employment is one of the most watched of the economic indicators. Employment means income, which leads to spending, which boosts overall economic performance. Data availability varies widely among the industrialized countries. For example, Canada issues a separate earnings report about two weeks after employment and unemployment data become available. Australia also issues a combined employment and unemployment report, but separate wage information. In Germany, the emphasis is on the number of unemployed, and employment data until recently lagged by two months. 126 ECONOMIC INDICATORS THE INTERNATIONAL LABOUR ORGANISATION The International Labour Organisation (ILO) is based in Geneva and is part of the United Nations. The role of the ILO is to improve conditions for working people and to prevent unemployment worldwide. The ILO definition provides the basis for all other definitions of unemployment.
eBook - PDF- Steven A. Greenlaw, David Shapiro, Daniel MacDonald(Authors)
- 2022(Publication Date)
- Openstax(Publisher)
Goals In thinking about the macroeconomy's overall health, it is useful to consider three primary goals: economic growth, low unemployment, and low inflation. • Economic growth ultimately determines the prevailing standard of living in a country. Economists measure growth by the percentage change in real (inflation-adjusted) gross domestic product. A growth 450 19 • The Macroeconomic Perspective Access for free at openstax.org rate of more than 3% is considered good. • Unemployment, as measured by the unemployment rate, is the percentage of people in the labor force who do not have a job. When people lack jobs, the economy is wasting a precious resource-labor, and the result is lower goods and services produced. Unemployment, however, is more than a statistic—it represents people’s livelihoods. While measured unemployment is unlikely to ever be zero, economists consider a measured unemployment rate of 5% or less low (good). • Inflation is a sustained increase in the overall level of prices, and is measured by the consumer price index. If many people face a situation where the prices that they pay for food, shelter, and healthcare are rising much faster than the wages they receive for their labor, there will be widespread unhappiness as their standard of living declines. For that reason, low inflation—an inflation rate of 1–2%—is a major goal. Frameworks As you learn in the micro part of this book, principal tools that economists use are theories and models (see Welcome to Economics! for more on this). In microeconomics, we used the theories of supply and demand. In macroeconomics, we use the theories of aggregate demand (AD) and aggregate supply (AS). This book presents two perspectives on macroeconomics: the Neoclassical perspective and the Keynesian perspective, each of which has its own version of AD and AS. Between the two perspectives, you will obtain a good understanding of what drives the macroeconomy.
eBook - PDF- David Shapiro, Daniel MacDonald, Steven A. Greenlaw(Authors)
- 2022(Publication Date)
- Openstax(Publisher)
In macroeconomics, we use the theories of aggregate demand (AD) and aggregate supply (AS). This book presents two perspectives on macroeconomics: the Neoclassical perspective and the Keynesian perspective, each of which has its own version of AD and AS. Between the two perspectives, you will obtain a good understanding of what drives the macroeconomy. Policy Tools National governments have two tools for influencing the macroeconomy. The first is monetary policy, which involves managing the money supply and interest rates. The second is fiscal policy, which involves changes in government spending/purchases and taxes. We will explain each of the items in Figure 6.2 in detail in one or more other chapters. As you learn these things, you will discover that the goals and the policy tools are in the news almost every day. 6.1 Measuring the Size of the Economy: Gross Domestic Product LEARNING OBJECTIVES By the end of this section, you will be able to: • Identify the components of GDP on the demand side and on the supply side • Evaluate how economists measure gross domestic product (GDP) • Contrast and calculate GDP, net exports, and net national product Macroeconomics is an empirical subject, so the first step toward understanding it is to measure the economy. How large is the U.S. economy? Economists typically measure the size of a nation’s overall economy by its gross domestic product (GDP), which is the value of all final goods and services produced within a country in a given year. Measuring GDP involves counting the production of millions of different goods and services—smart phones, cars, music downloads, computers, steel, bananas, college educations, and all other new goods and services that a country produced in the current year—and summing them into a total dollar value. This task is straightforward: take the quantity of everything produced, multiply it by the price at which each product sold, and add up the total.
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