Economics: The Macroeconomic Calendar Essay

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THE MACROECONOMIC CALENDAR
Each month government agencies like the Departments of Labor and Commerce, and private institutions publish a variety reports addressing leading, lagging, and coincident indicators.
1. Lagging indicators, like the unemployment rate and corporate profits, are of little help in forecasting since they change only after the economy begins to shift.
2. Coincident indicators, like personal income and industrial production that move simultaneously with the business cycle are equally unhelpful in forecasting the future.
3. Leading indicators that move in advance of changes in the business cycle are more helpful. Housing starts usually start to increase several months before the emergence of full recovery, and tail off
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THE MACROECONOMIC CALENDAR
Each month government agencies like the Departments of Labor and Commerce, and private institutions publish a variety reports addressing leading, lagging, and coincident indicators.
1. Lagging indicators, like the unemployment rate and corporate profits, are of little help in forecasting since they change only after the economy begins to shift.
2. Coincident indicators, like personal income and industrial production that move simultaneously with the business cycle are equally unhelpful in forecasting the future.
3. Leading indicators that move in advance of changes in the business cycle are more helpful. Housing starts usually start to increase several months before the emergence of full recovery, and tail off several months before a recession begins.
Once again a broad index comes to the rescue. As a manager, you should maintain a close watch on the Conference Board’s Composition Index of Leading Economic Indicators. The index charts the movements of 10 individual leading indicators. Included in this list is the index of consumer expectations, new orders for capital goods, and changes in the money supply. These are chosen because they relate directly or indirectly to changes in fiscal and monetary policy as well as components of the GDP equation. When the Composition Index has trended down 3 to 5 consecutive months, it generally signals a coming recession. A similar sustained upturn of the Index generally indicates economic recovery and
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