Economic IndicatorsWhether you are a business manager, a business student, an investor, a policy maker, or a financial analyst, almost every market participant is eager to know the tendency of the economy and inflation. The Federal Reserve takes actions either to simulate or maintain the economy by responding the current economy signals accordingly. It is because factors greatly determine the course of the major financial markets and policies that market participants. This paper mainly focuses on three major elements of economic indicators. It first gave us a brief introduction of what economic indicators are and why are they so important in financial markets. Then, it introduced three major indicators with articles and news related to each of the category, giving us a general picture of what influences did those indicators bring to economy and what did we learn from interpreting those indicators. The three indicators are treasury department policies, productivity, and fiscal policies. Through indicators, market participants are able to efficiently respond to the future markets by making preparations in advance. Finally, it concluded with emphasis on the importance of economic indicators.
Global markets change day by day. Consumers, investors, politics, governments are eager to know what might happen in the future in order to derive the most effective decision-making. To get the best return on investments, to measure companies and products, to get a better picture of how the economy is performing, to make a judgment/ decision on news and choices…etc., these are some of the common reasons why economic figures have become so significant in our daily activities. Economic figures can be applied to demonstrate almost every aspect of phenomenon. Economic indicators are public statistics that help us interpret current market conditions as well as forecast market tendencies. The combination among all the factors is going to strongly influence the direction of major financial markets.
The IMF
To develop a model to study the economics of the world’s markets, economists have relied on different forms of economic data in a number of ways. For example, they have looked at international financial and securities data—including the World Economic Forum (WEF) and various IMF reports. These data are generally based on information provided on the web and by the economists themselves. There is also data collected by individual economists in a study in which they measure market outcomes, or take stock and other indicators that they consider to be important to understand how the economy operates: for example, international health services (HIPS) and the food market of Italy (KOS). These data provide different insights and new insights into some major problems facing real economies.
There is another way of looking at the economic data: a series of indices, usually developed for non-governmental, non-governmental organisations, that use indicators and data developed by a well-known economist. These indices assess a wide range of economic and social indicators such as income, growth (employment, inflation), real income, growth rates, employment in each country’s primary source of output (such as agriculture), health care, and the labour force, as well as social class and racial inequality. They are then used to formulate monetary policy to promote economic growth and to forecast the growth prospects of firms and governments.
We need data on, for example, the number of manufacturing jobs lost in the world’s largest economies, which represents the most recent OECD average annual number of working lives per person. The IMF notes that these numbers are the most accurate in a wide section of the world and are taken in a very wide range of terms including “business cycle employment,” “intrinsic employment/nonproductive employment,” and “total non-product employment.” The IMF notes that they are even more accurate for people on fixed incomes as income levels can increase or fall within an economy. But these figures are not the only indicators used in the analysis of the economics of the global financial system, so we need statistics on how these are represented in the models to help explain the rapid shift in figures from traditional indicators of wealth accumulation to new data.
An important point to consider is that there is a number of different models: those used to forecast the impact of a specific economic change. The IMF also notes that the various models may also have different implications depending on the degree of confidence that the results provide of the changes. For example, some models include the “inter-model uncertainty” that occurs when the economy is hit and fall apart or when a recession shows up and the economy is underperforming, as shown in Figure 1 below. (Note that many different models will use different forms or methods of accounting for these specific economic shocks, which changes the results but adds to the overall uncertainty.) While the IMF notes that many models may not have the same level of reliability with the current data, these models can predict an economy with the possibility of significant changes in economic data (from an economic perspective and in the real world).
Figure 1: Variables and models: model output vs. input growth rate.
Although these indicators are often cited interchangeably, they are one way of looking at the world’s economic system. A