It’s About The Numbers
It shouldn’t be surprising that many people get lost during a discussion when the economy is concerned. The talk ends up focusing mostly on various economic recession statistics and other factors. One area is the potential indicators that help many economists make their predictions about market behavior. Still, people may want to get beyond the jargon and get some simple explanations. Keep reading and I will explain some basics.
Considering The Stats
It is crucial to understand something about today’s economic recession statistics. By and large, the same figures that are used to make economic predictions are subject to manipulation by the government and other organizations. In fact, these figures have been so compromised it is difficult to access their level of accuracy. Yet, despite failures to reach a level of scientific precision, economic statistics have value – even if they’ve be diluted and marginalized.
Four Key Indicators
The National Bureau of Economic Research (NBER) distributes reports on the recession. This data has been compared with that which was recorded in previous six recessions in the United States. This takes in a period of forty years. The following indicators have been used to measure the impact of a recession.
1. Personal income – This figure includes disposable income and as well as actual spending. At this point, these numbers have suffered significant declines and continue to be very low. Personal income levels decline as a result of unemployment, underemployment, and inflation, yet they can be influenced by the spending habits of consumers.
2. Industrial production levels – While they’ve been noted in the past, some are seeing production levels that are far lower today than in any of the previous recessions. Those at the NBER have stated that this is a troubling trend since it may actually get far worse over a longer time frame (in this case, it may mean a matter of months).
3. Unemployment levels – When looking at the rate of employment across the country it is disheartening to note that these levels have reached their lowest point even when compared other recessions over the last forty year period. Unemployment is a mutually reinforcing factor because it will spread worsening conditions across the economy by increases in the deficit by diverting more money to unemployment benefits and lower levels of consumer spending and taxes received.
4. The Gross Domestic Product (GDP) – By far the strongest indicators of an impending recession, the GDP is a tool used to determine whether it is a recession or a depression. In a recession the GDP will dramatically fall (but by less than 10%) over a period of several months. Recently, the GDP reached deeper – even record – lows.
Stay Educated
It might be easier understand now how important it is to educate ourselves on the causes, indicators and economic recession statistics themselves. Proper knowledge will help us make far better choices and allow us to protect our financial futures as well as those of loved ones. If you can use the web to get a broader range of knowledge, exercising some discretion as you read different resources.
