Economic Indicators

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Economic Indicators When predicting the future of the economy it is necessary to look at forecasts from several different economic indicators such as Real GDP, unemployment rates, the Consumer Price index, interest rates, Producer Price Index, and oil and fuel prices. It can be helpful to look at more than one forecast as there may be a variety of forecasts with different results or bias. Comparing two forecasts per indicator will give consumers a better idea of upcoming economic conditions. After evaluating such forecasts, it is important to analyze which forecast best suits the current circumstances to more accurately prediction of the economy. Unemployment Rate Although some degree of unemployment is inevitable in a complex economy, the amount of unemployment varies substantially over time and across countries. Unemployment rate forecasts matter to the financial market and consumers. Unexpected changes in the unemployment rate have a statistically significant effect on the economy. These unemployment rate changes affect consumer confidence because the public identifies the unemployment rate with the economy's health. To the extent that changes in the unemployment rate influence households' perceptions and expectations of economic conditions, they also affect spending, output, and employment. Sources, such as The University of Central Florida and The Livingston Survey have released forecasts of the US unemployment rate. The Livingston Survey released a 2006 forecast that forecasts sustained output growth through the end of 2007. Growth rate will increase to 2.8% in the first half of 2007, and they predict it will then increase to 3.1%. The Livingston Survey has also said that the unemployment rate is expected to rise f... ... middle of paper ... ...on March 1, 2007 from the Congressional Budget Office website: http://www.cbo.gov/showdoc.cfm?index=7731&sequence=0 The Livingston Survey. (2006, December 7). Retrieved on March 1, 2007 from the Philadelphia Federal Reserve Bank website: http://www.phil.frb.org/files/liv/livdec06.pdf The Livingston Survey (2006, December 7). Forecasters Lower Their Estimates for Growth and Unemployment. Federal Reserve Bank of Philadelphia. Retrieved on March 2, 2007 from http://www.phil.frb.org/files/liv/livdec06.pdf USA: 5-year forecast table. (2007, February 21) Economist ViewsWire. Retrieved March 3, 2007 from Economist Intelligence Unit Database U.S. Forecast (2007, February). Highlights of the 1Q 2007 Forecast. College of Business Administration – University of Central Florida. Retrieved on March 2, 2007 from http://www.bus.ucf.edu/hitec/UCF_US_ForecastFeb07Final.pdf

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