Question

each indicator in order for it to correctly predict the state of the U.S. economy in late 2015. below and clearly state what should be happening [increasing; decreasing; unchanged] with In class we discussed several leading economic indicators. Select ANY 3 from the ones listed

1) Index of consumer expectation

2) New building permits issued

3) Vendor performance (companies receiving slower deliveries from suppliers)

4) Average weekly initial claim for state unemployment benefits.

5) Index of stock prices.

Answer 1

These mentioned indicators are used to gauge health of economic system. Since US economy has recovered from deep economic crisis, it is on high growth trajectory with unemployment rate falling below 4 % and inflation moving close to 2 %. Following would be movements in these indicators:

• Index of consumer expectation: Index of consumer expectation would be positive since consumers are now optimistic about future income and growth rate. Thus, they would be spending more on goods and services.
• Average initial weekly claims of unemployment benefits: Economy is performing beyond the expectation. thus, people are employed and there would be fall in claim of employment benefits.
• Index of stock price: Stock prices rise when economy is on right path and expected to deliver robust growth rate in future. Such, rise in stock prices is synonym of positive growth rate.