Return

This lesson focuses on the March 25, 2011, third (final) estimate of U.S. real gross domestic product (real GDP) growth for the fourth quarter (Q4) of 2010, as reported by the U.S. Bureau of Economic Analysis (BEA). The current data and historical data are explained. The meaning of GDP and potential impacts of changes of GDP are explored. This lesson will also raise questions about the impact of the current level of growth on the U.S. economy and individuals.

KEY CONCEPTS

Business Cycles, Coincident Indicators, Gross Domestic Product (GDP), Lagging Indicators, Leading Economic Indicators, Macroeconomic Indicators, Nominal Gross Domestic Product (GDP), Per Capita Gross Domestic Product (GDP), Real Gross Domestic Product (GDP)

STUDENTS WILL

  • Determine the current and historical growth of U.S. real gross domestic product.
  • Identify the components of the measurement of the nation's gross domestic product.
  • Assess the relationship of real GDP data, the indexes of economic indicators, and business cycles.
  • Speculate about the nature and impact of current economic conditions and implications for the future.

Current Key Economic Indicators

as of November 10, 2014

Inflation

The Consumer Price Index for All Urban Consumers increased 0.1 percent in October on a seasonally adjusted basis. The core inflation rate increased the same amount. For the previous 12 months, the index increased 1.7%, the same rate as reported in the September report.

Employment and Unemployment

According to the October report of the Bureau of Labor Statistics, the unemployment rate fell from 5.9% to 5.8%, and the number of individuals unemployed also decreased. Total nonfarm employment rose by 214,000 in October. Employment gains were concentrated in retail trade, food services and health care.

Real GDP

The advance estimate for real GDP growth in the third quarter of 2014 was 3.5%, a decrease from the revised second quarter growth of 4.6%. Inventory investment reduced third quarter growth, while it added to second quarter growth. In addition, consumer spending increased at a lower rate in the third quarter, compared to the second. Finally, business investment increased in the third quarter, but at a lower rate than in the second quarter.

Federal Reserve

The FOMC believes that the labor market has shown considerable improvement and the risks of inflation rising above its 2% target are low. Therefore, the Federal Reserve announced plans to end its purchase of financial assets. In addition, the federal funds rate will remain at its current low level. However, the FOMC has signaled its willingness to increase the federal funds rate if inflation shows signs of rising above the 2% target.

INTRODUCTION

Each month, the Bureau of Economic Analysis (BEA), an agency of the U.S. Department of Commerce, releases an estimate of the level and growth of U.S. gross domestic product (GDP), the output of goods and services produced by labor and property located in the United States.

This lesson focuses on the BEA's third and final estimate of real GDP released on March 25, 2011, for the fourth quarter  of 2010 (October-December.) Understanding the level and rate of growth of the economy's output (GDP) helps to better understand growth, employment trends, the health of the business sector, and consumer well-being. 

[Note to teachers: During the second semester of the 2010-2011 school year (January-May), EconEdLink will publish five Focus on Economic Data lessons on "U.S. Real GDP Growth."  Real GDP data is announced three times for each fiscal quarter. For Q4 2010, the first estimate was made in January, the second estimate was made in February, and the third estimate for Q4 is made in March - THIS LESSON.]

[NOTE: GDP data reports lag the reporting period - the fiscal quarter. The current estimate is for Q4 of 2010 (October-December).  Each of the three estimates for a quarter will include more comprehensive data and may modify the growth rate reported earlier].

[NOTE: The BEA previously used the terms "advance, preliminary and final" to identify the three quarterly real GDP estimates.  The terms "first, second and third" have replaced the previous announcement language.]

Each Real GDP lesson will provide the most up-to-date data and focus on some specific topics or issues related to GDP:

  • January (first estimate for Q4 2010): How to read the data, real vs. nominal, and how the data is collected
  • February (second estimate for Q4 2010): Factors influencing the change in GDP, revisions, and seasonal adjustment
  • March (third estimate for Q4 2010): Business cycles and indicators of future growth (decline) THIS LESSON
  • April (first estimate for Q1 2011): Regional GDP growth data and international comparisons.
  • May (second estimate for Q1 2011): Year-end summary and future growth factors.

RESOURCES


Key Economic Indicators

as of March 25, 2011

Inflation

On a seasonally adjusted basis, the CPI-U increased 0.5 percent in February after rising 0.4 percent in January. The index for all items less food and energy rose 0.2 percent in February, the same increase as in January.

Employment and Unemployment

U.S. non-farm payroll employment increased by 192,000 jobs in February, and the unemployment rate fell by 0.1 percent to 8.9 percent. Job gains occurred in manufacturing, construction, professional and business services, health care, and transportation and warehousing.

Real GDP

U.S. real gross domestic product increased at an annual rate of 3.1 percent in the fourth quarter of 2010, that is, from the third quarter to the fourth quarter), according to the "third" estimate released by the Bureau of Economic Analysis. In February, the second estimate, the increase in real GDP was estimated to be 2.8 percent In the third quarter of 2010, U.S. real GDP increased 2.6 percent.

Federal Reserve

The Federal Open Market Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period.

PROCESS

U.S. economic growth, as measured by the change in real gross domestic product grew at a rate many observers consider to be necessary for the economy to sustain itself.  Unfortunately, the economy may not have grown enough to significantly impact the persistently high U.S. unemployment rate, which was 9.4 percent in February, 2011. 

Take a look at U.S. GDP real growth for the last quarter of 2010 and decide for yourself if it is enough to be called "good news."

News Release: Gross Domestic Product: Fourth Quarter 2010
U.S. Bureau of Economic Analysis
Released March 25, 2011

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 3.1 percent in the fourth quarter of 2010, (that is, from the third quarter to the fourth quarter), according to the "third" estimate released by the Bureau of Economic Analysis.  In the third quarter, real GDP increased 2.6 percent."

Remember, real GDP estimates for a quarter are released three times over three months. For the fourth quarter of 2010, the first estimate in January 2011 was 3.2 percent growth. The second estimate in February was slightly less growth, 2.8 percent. This estimate, the final estimate for the quarter, is 3.1percent growth. The BEA explained, “The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month.  In the second estimate, the increase in real GDP was 2.8 percent .”

The BEA comments on the increase or decrease in real GDP citing two measurements of change. When they use the term “acceleration,” they refer to the rate of change. The real GDP announcement also cites the “increase” or the dollar value increase in the various sectors. The two following paragraphs from the news release identify the sectors that contributed to the total increase or subtracted from the increase in two ways. Imports, for example, increased as part of the total, but at a slower rate of change.

The increase in real GDP in the fourth quarter primarily reflected positive contributions from
personal consumption expenditures (PCE), exports, and nonresidential fixed investment that were partly offset by negative contributions from private inventory investment and state and local government spending.  Imports, which are a subtraction in the calculation of GDP, decreased.
"

"The fourth-quarter acceleration in real GDP primarily reflected a sharp downturn in imports, an acceleration in PCE, an upturn in residential fixed investment, and an acceleration in experts that were partly offset by downturns in private inventory investment, in federal government spending, and in state and local government spending, and a deceleration in nonresidential fixed investment."

Each month recently, the BEA has commented specifically on two important product groups – motor vehicles and computers. “Final sales of computers added 0.35 percentage point to the fourth-quarter change in real GDP after adding 0.29 percentage point to the third-quarter change.  Motor vehicle output subtracted 0.27 percentage point from the fourth-quarter change in real GDP after adding 0.49 percentage point to the third-quarter change." You may remember that motor vehicle sales were stimulated in mid-2009 by the federal government's “Cash for Clunkers” rebate program.

[Note to teachers: Students may ask why the three estimates for a quarter will vary as much as they did for 2010 Q4.  Take a look at the lists of leading, concurrent and lagging economic indicators at the end of the lesson process section.  The concurrent or lagging indicators may influence the BEA to change the estimate.]

Figure 1, below, shows the growth rates of U.S. real GDP from 2000 through 2010. Note the business cycles – periods of growth and decline. Business cycles are defined later in this lesson.

Figure 1 GDP

[Note to Teachers;  Students should be able to identify the recent periods of recession.  To confirm the "official" recessions identified by the National Bureau of Economic Research (NBER), go to: www.nber.org/cycles/cyclesmain.html ]

A Note About “Real” GDP Growth

To adjust for the effect of inflation and to determine “real” GDP, the BEA uses a price index. The price index for gross domestic purchases is the “percent change in the price index for gross domestic purchases. This index measures the prices of goods and services purchased by U.S. residents, regardless of where the goods and services are produced. The gross domestic purchases price index is derived from the prices of personal consumption expenditures, gross private domestic investment, and government consumption expenditures and gross investment. Thus, for example, an increase in the price of imported cars would raise the prices paid by U.S. residents and thereby directly raise the price index for gross domestic purchases.”

In Q4 2010, the BEA stated in the rews release, “The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 2.1 percent in the fourth quarter, the same increase as in the second estimate; this index increased 0.7 percent in the third quarter.  Excluding food and energy prices, the price index for gross domestic purchases increased 1.1 percent in the fourth quarter, compared with an increase of 0.4 percent in the third."

[Note to teachers:  To link the real GDP growth rate to a lesson on "inflation," see the most recent EconEdLink lesson on "Consumer Price Index and Inflation."  Link: www.econedlink.org/lessons/economic-lesson-search.php?type=educator&gid=4]

What sectors grew or declined in 2010 Q4?

Real personal consumption expenditures "increased 4.0 percent in the fourth quarter, compared with an increase of 2.4 percent in the third.  Durable goods increased 21.1 percent, compared with an increase of 7.6 percent.  Nondurable goods increased 4.1 percent, compared with an increase of 2.5 percent.  Services increased 1.5 percent, compared with an increase of 1.6 percent."

Real nonresidential fixed investment "increased 7.7 percent in the fourth quarter, compared with an increase of 10.0 percent in the third.  Nonresidential structures increased 7.6 percent, in contrast to a decrease of 3.5 percent.  Equipment and software increased 7.7 percent, compared with an increase of 15.4 percent.  Real residential fixed investment increased 3.3 percent, in contrast to a decrease of 27.3 percent."

Real exports of goods and services "increased 8.6 percent in the fourth quarter, compared with an increase of 6.8 percent in the third.  Real imports of goods and services decreased 12.6 percent, in contrast to an increase of 16.8 percent."

Real federal government consumption expenditures and gross investment "decreased 0.3 percent in the fourth quarter, in contrast to an increase of 8.8 percent in the third.  National defense decreased 2.2 percent, in contrast to an increase of 8.5 percent.  Nondefense increased 3.7 percent, compared with an increase of 9.5 percent.  Real state and local government consumption expenditures and gross investment decreased 2.6 percent, in contrast to an increase of 0.7 percent."

The change in real private inventories "subtracted 3.42 percentage points from the fourth-quarter change in real GDP, after adding 1.61 percentage points to the third-quarter change.  Private businesses increased inventories $16.2 billion in the fourth quarter, following increases of $121.4 billion in the third quarter and $68.8 billion in the second."

[Note to teachers: Inventories subtracted significantly from GDP in Q4 (minus 3.42 percent.)    Ask the students what this might mean, as they think about this BEA real GDP growth announcement. If consumer demand does not increase and inventories build, how might producers respond? (high inventories may cause businesses to lay-off workers or not hire).]

Real final sales of domestic product (GDP less change in private inventories) "increased 6.7 percent in the fourth quarter, compared with an increase of 0.9 percent in the third."

A Reminder:  The formula for determining GDP is C+I+G+X = GDP

  • C = Personal consumption expenditures
  • I = Nonresidential fixed investment
  • G = Gvernment expenditures
  • X = New exports (Exports minus imports)


Other Measures of Output

  • Gross domestic purchases -  "purchases by U.S. residents of goods and services wherever produced -- decreased 0.2 percent in the fourth quarter, in contrast to an increase of 4.2 percent in the third."
     
  • Real gross national product - "the goods and services produced by the labor and property supplied by U.S. residents -- increased 2.8 percent in the fourth quarter, compared with an increase of 2.3 percent in the third. GNP includes, and GDP excludes, net receipts of income from the rest of the world, which decreased $10.5 billion in the fourth quarter after decreasing $7.1 billion in the third; in the fourth quarter, receipts increased $21.1 billion, and payments increased $31.5 billion."

[Note to teachers: A Federal Reserve Bank of St. Louis publication explains the difference between GDP and GNP.  Link: http://fraser.stlouisfed.org/publications/erp/page/7305/download/46759/7305_ERP.pdf. ]

  • Current-dollar GDP -"the market value of the nation's output of goods and services -- increased 3.5 percent, or $126.3 billion, in the fourth quarter to a level of $14,871.4 billion. In the third quarter, current-dollar GDP increased 4.6 percent, or $166.4 billion."


Gross Domestic Product for the Full Year of 2010

In addition to the regular quarterly real GDP estimate, the BEA adds to this report the annual averages for 2010.  Note that this is an average of the four quarters and may be considerably less or more than the any one of the quarterly real GDP figures.  In this case, the difference is small.

  • "Real GDP increased 2.9 percent in 2010 (that is, from the 2009 annual level to the 2010 annual level), in contrast to a decrease of 2.6 percent in 2009."
  • "The increase in real GDP in 2010 primarily reflected positive contributions from private inventory investment, exports, personal consumption expenditures (PCE), nonresidential fixed investment, and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased."
  • "The upturn in real GDP primarily reflected upturns in exports, in nonresidential fixed investment, in PCE, and in private inventory investment and a smaller decrease in residential fixed investment that were partly offset by an upturn in imports."
  • "The price index for gross domestic purchases increased 1.3 percent in 2010, in contrast to a decrease of 0.2 percent in 2009."

The figure below shows the current dollar and constant dollar GDP data from 2000 through 2010. The difference between the current dollar figure and the constant dollar figure is the rate of inflation. These figures are in billions of U.S. dollars.  The current dollar GDP at the end of 2010 was over $14.66 trillion and real GDP was almost $13.25 trillion.

U.S. Current and Constant Dollar GDP
2000-2010 (U.S. Dollars)
Year Current Dollar
GDP
Constant Dollar
"Real" GDP
2000 $9,951.5 $11,226.0
2001 10,286.2 11,347.2
2002 10,642.3 11,553.0
2003 11,142.1 11,840.7
2004 11,867.8 12,263.8
2005 12,638.4 12,638.4
2006 13,398.9 12,976.2
2007 14,061.8 13,228.9
2008 14,369.1 13,228.8
2009 14,119.0 12,880.6
2010 14,660.4 13,248.2

*Note:  The 2007-2009 GDP data has been revised from previous estimates.  According to these revised BEA figures, U.S. real GDP decreases very slightly from 2007 to 2008 and dramatically decreased in 2009.  By the end for 2010, real GDP had surpassed the previous high level achieved in 2007. 

U.S. GDP in 2010 = $14.66 trillion - about $47,290 per capita.*

*The U.S. population was estimated to be approximately 310 million at the end of 2010.

Note: 2007-2009 GDP data has been revised from previous estimates. According to these revised BEA figures, U.S. real GDP decreased very slightly from 2007 to 2008 and dramatically decreased in 2009. By the end for 2010, real GDP had surpassed the previous high level achieved in 2007.

[Note to teachers: Use the above data to reinforce the meaning of the “current dollar” and “constant dollar” measurements of GDP. You can relate this to the real purchasing power of income over time. It takes more dollars today to purchase a like amount of goods and services than in earlier years.]

[Note to Teachers: In addition to real GDP, the BEA also reports monthly on corporate profits. For this data, go to the BEA GDP Release Fourth Quarter 2009 . Scroll down to the section on “corporate profits.”]

Business Cycles and Recessions

The BEA tracks changes in real GDP, the traditional measurement used to identify business cycles. Though it is a critical measure, real GDP is not the sole determinant in the identification of recessions. A recession, a "significant decline in economic activity spread across the economy, lasting more than a few months," is identified by the National Bureau of Economic Research (NBER) "Business Cycle Dating Committee." In addition to real GDP, the key measurements in the determination of a recession are real income, payroll employment, industrial production, and wholesale-retail sales. Recently, the NBER has identified payroll employment as the key criteria used to identify business cycles.

In its announcement of the beginning of the recession in December 2008, the NBER committee cited these trends in economic activity.  Payroll employment “reached a peak in December 2007 and has declined every month since then.

  • "Real personal income less transfer payments, real manufacturing and wholesale-retail trade sales, industrial production, and employment "all reached peaks between November 2007 and June 2008.”

In September, 2009, the NBER identified the end of the recession.  "The committee determined that a trough in business activity occurred in the U.S. economy in June 2009. The trough marks the end of the recession that began in December 2007 and the beginning of an expansion. The recession lasted 18 months, which makes it the longest of any recession since World War II. Previously the longest postwar recessions were those of 1973-75 and 1981-82, both of which lasted 16 months."

Business cycles are fluctuations in aggregate economic activity in cycles of expansion, peak, contraction, and trough. In a business cycle, several macroeconomics variables will move together (not lock-step in short periods) in a general trend. The cycles recur, but there is no consistent pattern of depth or length of time. The NBER will not identify a business cycle downturn as a recession unless it meets these general qualities and the declines are sufficient enough to meet the description as a "significant decline in economic activity spread across the economy, lasting more than a few months."

Figure 2, below, illustrates a "typical" business cycle, with periods of expansion, peak, contraction, and trough.

Figure 3 GDP

Measuring Economic Activities – Economic Indicators

Much attention is paid in the media to the "Index of Leading Indicators," a composite index used to estimate future economic activity. The Index is determined by The Conference Board, "a global independent membership organization working in the public interest. It publishes information and analysis, makes economics-based forecasts and assesses trends, and facilitates learning by creating dynamic communities of interest that bring together senior executives from around the world." 

The Index consists of a variety of measures of economic activity that have historically turned downward before contractions and upward before expansions. The Conference Board created a single index value, a "composite index," composed of ten variables. Many economists believe that the Index of Leading Indicators can "provide an early warning system so that policymakers can shift toward macroeconomic stimulus when the index fails."

The Conference Board's most recent report on Global Business Cycle Indicators ” was released on March 17, 2011.

The Conference Board Leading Economic Index (LEI) for the U.S. "increased 0.8 percent in February to 113.4 (2004 = 100), following a 0.1 percent increase in January (2011), and a 1.0 percent increase in December (2010).”

Ataman Ozyildirim, Economist at The Conference Board comments on the meaning of the LEI, “With February’s large gain, the U.S. LEI returned to the strengthening upward trend that began last September. The LEI is pointing to an economic expansion that should gain more momentum in the coming months. In February, improvements in labor markets, financial components, and consumer expectations more than offset falling housing permits.”

Says Ken Goldstein, economist at The Conference Board: “Latest data point to an improving economy, one that will continue to gain strength through the summer. The economy continues to encounter strong headwinds. One headwind is the sharp rise in food and energy prices. Still, the way inflation will move is unclear, given the degree of slack in the overall economy, and especially in the labor market.

The Conference Board Coincident Economic Index (CEI) for the U.S. "increased 0.2 percent in February to 102.5 (2004 = 100), following a 0.3 percent increase in January, and a 0.3 percent increase in December."

The Conference Board Lagging Economic Index (LAG) "increased 0.2 percent in February to 108.0 (2004 = 100), following a 0.3 percent decline in January, and a 0.2 percent increase in December.The various cyclical indicators used by the Conference Board are classified into three categories—leading, coincident, and lagging, based on their timing in relation to the business cycle."

Coincident indicators, such as employment, production, personal income, and manufacturing and trade sales, measure current aggregate economic activity.

  • Employees on nonagricultural payrolls
  • Personal income less transfer payments
  • Index of industrial production
  • Manufacturing and trade sales

Leading indicators, such as average weekly hours, new orders, consumer expectations, housing permits, stock prices, and the interest rate spread, tend to change direction ahead of the business cycle

  • Average weekly hours, manufacturing
  • Average weekly initial claims for unemployment insurance
  • Manufacturers’ new orders, consumer goods and materials
  • Vendor performance, slower deliveries diffusion index
  • Manufacturers’ new orders, nondefense capital goods
  • Building permits, new private housing units
  • Stock prices, 500 common stocks 
  • Money supply, M2
  • Interest rate spread, 10-year Treasury bonds less Federal funds (%)
  • Index of consumer expectations

Lagging indicators tend to change direction after the coincident indicators. Lagging indicators represent costs of doing business, such as inventory-sales ratios, change in unit labor costs, average prime rate charged by banks, and commercial and industrial loans outstanding. Lagging indicators, such as the ratio of installment credit outstanding to personal income, the change in consumer prices for services, and average duration of unemployment reflect consumer behavior. The lagging indicators may confirm the trends identified with the leading and coincident indicators.

  • Average duration of unemployment
  • Inventories to sales ratio, manufacturing and trade
  • Change in labor cost per unit of output, manufacturing (%)
  • Average prime rate charged by banks (%)
  • Commercial and industrial loans outstanding
  • Consumer installment credit outstanding to personal income ratio
  • Change in consumer price index for services (%)

[Note to teachers: Students may be interested in the meanings of the leading, concurrent and lagging economic indicators.   Go to the Conference Board web page: Economic Indicators for more information.]

ASSESSMENT ACTIVITY


Short Answer Essay Question:

1. If gross domestic product increases by 10 percent over a year, are we better off? Why or why not?

[Possible Answer: Perhaps we are better off. Maybe not. The answer depends upon what is happening to prices and what is happening to population. If prices and population together are rising by more than 10 percent per year, than we, on average, are worse off. We have fewer goods and services per person. If the nation's real per capita GDP increases, we may be "better off."]

CONCLUSION

The consensus about economic growth seems to be that an annual real GDP growth rate greater than 3.0 percent is a good sign for the economy.  The final BEA estimate of real GDP growth in all of 2010 was 2.8 percent - not quite up to the desired level.  Considering that in 2009, real GDP declined by 2.6 percent, the 2010 growth was a considerable improvement. 

Current Economic Policy Goals

Figure 4, below, shows the major components of U.S. gross domestic product from 2008 to 2010. Note that personal consumption expenditures are, by far, the largest component of GDP. Many analysts say that the true recovery from the recession will happen only when consumers increase their spending to previous levels. Others add that it will take increased business investment that results in job creation.  The figure also shows the dollar amounts of the components of the annualized U.S. real GDP in 2010.

Figure 4:  U.S. Real Gross Domestic Product
2010 and Changes in Real GDP
2008-2010
  Change
2007-08
Change
2008-09
Change
2009-10
Real GDP
2010
Total U.S. Gross Domestic
Product (GDP)
0.0% -2.6% 2.9% $13,248.2
   Personal Consumption Expenditures -0.3% -1.2% 1.7% $9,313.6
   Gross Private Domestic Investment -9.5% -22.6% 17.1% $1,774.5
   Net Exports of Goods and Services
      Exports 6.0% -9.5% 11.7% $1,665.5
      Imports -2.6% -13.8% 12.6% $2,088.0
   Government Consumption Expenditures
   and Gross Investment
2.8% 1.6% 1.0% $2,568.3


Recent government policy decisions to promote growth in the economy are aimed at stimulating one or more of the components - consumer spending, investment, government spending, or exports. The overall goal is to stimulate aggregate demand

Aggregate demand can also be illustrated by the formula AD = C + I + G + (X-M):

  •     C = Consumers' expenditures on goods and services
  •      I = Investment spending by companies on capital goods
  •     G = Government expenditures on publicly provided goods and services
  •     X = Exports of goods and services
  •     M = Imports of goods and services

By direct government spending, creating jobs, promoting investment, and increasing output, employment is increased and income is created.  As those with new jobs earn income, they increase their spending - increasing aggregate demand.  The $787 billion federal stimulus (American Recovery and Reinvestment Act of 2009) was intended to do just that. The U.S. government’s Recovery.Gov web site reports that between October 1 and December 31, 2010, stimulus programs created 582,089 new jobs.

For more information about the goals and impact of stimulus programs, go to Recovery.Gov ,  the U.S. government’s official website providing easy access to data related to Recovery Act spending.

EXTENSION ACTIVITY

Take another look at The Conference Board's  "Leading Economic Index" for the United States.

Which of these data points do you think are good indicators of the future health of the U.S. economy?

  • Average weekly hours, manufacturing
  • Average weekly initial claims for unemployment insurance
  • Manufacturers’ new orders, consumer goods and materials
  • Vendor performance, slower deliveries diffusion index
  • Manufacturers’ new orders, non-defense capital goods
  • Building permits, new private housing units
  • Stock prices, 500 common stocks
  • Money supply, M2
  • Interest rate spread, 10-year Treasury bonds less Federal funds (%)
  • Index of consumer expectations

Research one of these leading indicators. Summarize what it tells us about the future. For descriptions of the components of the Leading Economic Index, go to "www.conference-board.org/data/bci/index.cfm?id=2160 .

U.S. Indicators

Link to The Conference Board's most recent press release " The Conference Board Leading Economic Index® (LEI) for the U.S. Increases Again," released March 17, 2011.  LINK:  www.conference-board.org/pdf_free/economics/bci/MschoolT.pdf

Global Indicators

For more information about The Conference Board's "global business cycle indicators," go to: www.conference-board.org/data/bci.cfm