Principle Economic Indicators
The million (or should we say 'billion' now) dollar question is whether or not the United States' economy will stay in it's record 107 month expansion (according to the index of leading indicators) or come out of the boom and take a downturn into a recession. Nobody, including the Chairman of the Federal Reserve, Alan Greenspan has a crystal ball to provide insight as to what will happen if interest rates are raised, lowered, or left alone. However, Economists have developed a set of indicators to aid in predicting when a recession is about to occur and when the economy is in one. Indicators should not be mistaken for predictors. They are simply forecasting tools, and like any forecast can be misleading. The index of leading indicators that is reported in the popular press shows our economy is still in an expansion. For the purposes of our evaluation of the economy, we chose the Principle Economic Indicators tracked by the Bureau of Economic Analysis and the U.S. Census Bureau under the Economics and Statistics Administration at the U.S. Department of Commerce. There are thirteen Principle Economic Indicators, and they fall into five major categories: National Output and Income; Orders, S
Historically, the U.S. has been an economic juggernaut in the trade deficit area. During periods of economic growth, traditionally the U.S. trade deficit increases. According to the most recent BEA quarterly Current Account Balance Report, the January U.S. trade deficit hit an all-time high of $28.0 billion, up from $24.6 billion in December. While exports declined from their December level, imports continued to trend strongly upward. The annual rate deficit totaled $336 billion in January, up from $268 billion this time last year. Of course, higher oil prices were a major contributor to the rising trade deficit. The deficit is predicted to remain high, and the U.S. economy will continue to outpace the economies of its trading partners. Increased retail sales are a direct reflection of the level of Personal Consumption Expenditures. Personal Consumption Expenditures economic indicator measures consumer spending for all goods and services in the economic market. These expenditures comprise approximately two-thirds of the total GDP. When viewed as a running average, nearly every quarter since 1995, Real Personal Consumption Expenditures have realized quarterly gains compared to each previous quarter. With the recent increases in retail sales and the continued levels of Personal Consumption Expenditures there is no reason to doubt that our economy can continue it's creditable levels of growth. These levels of fiscal activity have been and will continue to keep funds moving regularly through the financial sector within the circular flow. Personal Income is a measurement of total pretax income earned by individuals, non-profit organizations, and private trust funds. It is expressed at an annual rate also. The more Personal Income increases the greater the potential for the American people to spend and save money, which directly influences the growth of the U.S. economy. Personal Income rose .7 percent in January, following an increase of .3 percent in December. The average monthly increases in 1999 were .5 percent. Some extenuating factors affected income in recent months, including cost of living increases in federal transfer payments, a federal pay raise, and agricultural subsidy payments in January. Real disposable income, income after taxes and adjusted for price changes, increased by .7 percent. There was no change in December. The individual personal saving rate rose from 1 percent in December, which was its low, to 1.4 percent in January. Savings rates generally go down in the months October through May due to Holiday spending (includes "paying off" credit cards). Building permits are one of the indicators of the current status of the economy. The number of residential building permits issued is an indicator of construction activity, which leads to other types of economic production. Before building residential or commercial structures the builder must apply for a building permit. Usually a contractor will apply for a permit at least 6 months in advance. By looking at the number of building permits that have been granted, economist can predict the amount of construction that is likely to begin in the next 6 to 9 months. This is only a prediction, and it could be inaccurate. Acquiring a building permit does not require the contractor to build.
Some common words found in the essay are:
Census Bureau, Account Balance, Consumption Expenditures, Trade Inventories, Corporate Profits, Shipments Inventories, Inventories Durable, Personal Income, Retail Sales, January February, retail sales, consumption expenditures, trade deficit, building permits, personal consumption expenditures, personal consumption, housing starts, consumer spending, annual rate, national output income, personal income, foreign trade, principle economic indicators, bureau economic analysis, construction spending data,
Approximate Word count = 3366
Approximate Pages = 13 (250 words per page double spaced)
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