Return

This lesson focuses on the March 29, 2012, third (final) estimate of U.S. real gross domestic product (real GDP) growth for the fourth quarter (Q4) of 2011, 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 level 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 May 5, 2013

Inflation

On a seasonally adjusted basis, the Consumer Price Index for All Urban Consumers decreased 0.2 percent in March after increasing 0.7 percent in February. The index for all items less food and energy rose 0.1 percent in March after rising 0.2 percent in February.

Employment and Unemployment

Total nonfarm payroll employment rose by 165,000 in April, and the unemployment rate was little changed at 7.5 percent. Employment increased in professional and business services, food services and drinking places, retail trade, and health care.

Real GDP

Real gross domestic product increased at an annual rate of 2.5 percent in the first quarter of 2013 (that is, from the fourth quarter to the first quarter), according to the "advance" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 0.4 percent.

Federal Reserve

To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent...

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 29, 2012, for the fourth quarter  of 2011 (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 2011-2012 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 2011): How to read the data, real vs. nominal, and how the data is collected
  • February (second estimate for Q4 2011): Factors influencing the change in GDP, revisions, and seasonal adjustment
  • March (third estimate for Q4 2011): Business cycles and indicators of future growth (decline) THIS LESSON
  • April (first estimate for Q1 2012): Regional GDP growth data and international comparisons.
  • May (second estimate for Q1 2012): Year-end summary and future growth factors.

MATERIALS


Key Economic Indicators

as of March 29, 2012

Inflation

On a seasonally adjusted basis, the Consumer Price Index for All Urban Consumers rose 0.4 percent in February after rising 0.2 percent in January. The index for all items less food and energy rose 0.1 percent in February after increasing 0.2 percent in January.

Employment and Unemployment

Nonfarm payroll employment rose by 227,000 in February, and the unemployment rate was unchanged at 8.3 percent. Employment rose in professional and businesses services, health care and social assistance, leisure and hospitality, manufacturing, and mining.

Real GDP

Real gross domestic product increased at an annual rate of 3.0 percent in the fourth quarter of 2011 (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 1.8 percent.

Federal Reserve

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.

PROCESS

The Bureau of Economic Analysis (BEA) final estimate of U.S. real GDP growth in the fourth quarter of 2011 was an increase of 3.0 percent.  Sounds pretty good or, at least, near the historical average real GDP growth rate of 3.28 percent. The U.S. economy has recently grown at a rate some observers consider to be necessary for the economy to sustain itself, but not enough to really pull the United States out of the recent recession and to reduce the persistently high U.S. unemployment rate. 

Take a look at U.S. GDP real growth for the fourth quarter of 2011 and decide for yourself if it is enough to be called "good news."

Note:  Unless otherwise cited, quoted materials in this lesson are from the Bureau of Economic Analysis March 29, 2012, announcement of the final estimate of U.S. gross domestic product for the fourth quarter of 2011.

News Release:

Gross Domestic Product, 4th quarter 2011 and annual 2011 (third estimate)
U.S. Bureau of Economic Analysis
Released March 29, 2012

“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 3.0 percent in the fourth quarter of 2011 (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 1.8 percent."

[Note to teachers: Students should be able to determine a percentage rate of increase. 

  1. Subtract the current real GDP level from the previous level.  13,429.0 minus 13,331.6 = 97.4.
  2. Divide the difference by the previous level by the difference. 97.4 divided by 13,331.6 = 0.0073
  3. Multiply that percentage by 4 (4 quarters.)  0.0073 times 4 = 0.02.92  or 2.92 percent.

(The reported rate of real GDP growth was 3.0 percent.  The difference is due to BEA statistical methodology and rounding.)]

Remember, real GDP estimates for a quarter are released three times over three months. For the fourth quarter of 2011, the first estimate in January 2012 was 2.8 percent growth. The second estimate in February was slightly better at 3.0 percent. This estimate, the final estimate for the quarter, is 3.0percent 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 also 3.0 percent.

[Note to teachers: Ask students if it makes sense to revise and report GDP growth three times over three months following each quarter.  What kind of new information might result in a revision?  See the section of this lesson on leading, concurrent and lagging indicators for more information.]

The BEA commented 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 private inventory investment, personal consumption expenditures (PCE), nonresidential fixed investment, exports, and residential fixed investment that were partly offset by negative contributions from federal government spending and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased."

"The acceleration in real GDP in the fourth quarter primarily reflected an upturn in private inventory investment and accelerations in PCE and in residential fixed investment that were partly offset by a deceleration in nonresidential fixed investment, a downturn in federal government spending, an acceleration in imports, and a deceleration in exports."

Each month recently, the BEA has commented specifically on two important product groups – motor vehicles and computers. "Motor vehicle output added 0.47 percentage point to the fourth-quarter change in real GDP after adding 0.12 percentage point to the third-quarter change. Final sales of computers added 0.12 percentage point to the fourth-quarter change in real GDP after adding 0.22 percentage point to the third-quarter change."

[Note to teachers: It is somewhat unusual for the second and third estimates for a quarter to be the same.  Quite often, new or more complete data can change the estimate significantly.  Historically, the difference between the advance and final estimates for a quarter have been about 0.2 percentage points.]

From quarter to quarter, real GDP growth rates can vary significantly.  Figure 1, below, shows the growth rates of U.S. real GDP from 2000 through 2011. Note the business cycles – periods of growth and decline. Business cycles are defined later in this lesson.

figure 1

[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 2011, the BEA stated in the news release, "The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 1.1 percent in the fourth quarter, the same increase as in the second estimate; this index increased 2.0 percent in the third quarter. Excluding food and energy prices, the price index for gross domestic purchases increased 1.2 percent in the fourth quarter, compared with an increase of 1.8 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 Q4 2011?

  • Real personal consumption expenditures "increased 2.1 percent in the fourth quarter, compared with an increase of 1.7 percent in the third.  Durable goods increased 16.1 percent, compared with an increase of 5.7 percent.  Nondurable goods increased 0.8 percent, in contrast to a decrease of 0.5 percent.  Services increased 0.4 percent, compared with an increase of 1.9 percent.”
     
  • Real nonresidential fixed investment "increased 5.2 percent, compared with an increase of 15.7 percent.  Nonresidential structures decreased 0.9 percent, in contrast to an increase of 14.4 percent. Equipment and software increased 7.5 percent, compared with an increase of 16.2 percent.  Real residential fixed investment increased 11.6 percent, compared with an increase of 1.3 percent.”
     
  • Real exports of goods and services increased 2.7 percent in the fourth quarter, compared with an increase of 4.7 percent in the third.  Real imports of goods and services increased 3.7 percent, compared with an increase of 1.2 percent.”
     
  • Real federal government consumption expenditures and gross investment “decreased 6.9 percent in the fourth quarter, in contrast to an increase of 2.1 percent in the third.  National defense decreased 12.1 percent, in contrast to an increase of 5.0 percent.  Nondefense increased 4.5 percent, in contrast to a decrease of 3.8 percent.  Real state and local government consumption expenditures and gross investment decreased 2.2 percent, compared with a decrease of 1.6 percent.”
     
  • Change in real private inventories“ added 1.81 percentage points to the fourth-quarter change in real GDP, after subtracting 1.35 percentage points from the third-quarter change.  Private businesses increased inventories $52.2 billion in the fourth quarter, following a decrease of $2.0 billion in the third quarter and an increase of $39.1 billion in the second.”

[Note to teachers: Inventories added to U.S. GDP in Q4 2011 (plus 1.81 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 new workers.)]

[Note to teachers:  Nonresidential fixed investment was up 5.2 percent in Q4, down from an increase of 15.7 percent in Q3.  How important is investment in future growth?  Investment should result in greater output and employment. Point out that consumer spending is about 70 percent of total GDP.  A larger increase in consumer spending is a much larger increase in the total.]

  • Real final sales of domestic product(GDP less change in private inventories) “increased 1.1 percent in the fourth quarter, compared with an increase of 3.2 percent in the third.” This is the output that was produced and sold in Q4. The remainder is an addition to inventories.

A Reminder:

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

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

Other Measures of U.S. Output

  • Gross domestic purchases  "purchases by U.S. residents of goods and services wherever produced -- increased 3.1 percent in the fourth quarter, compared with an increase of 1.3 percent in the third.
     
  • Real gross national product "the goods and services produced by the labor and property supplied by U.S. residents -- increased 1.8 percent in the fourth quarter, compared with an increase of 1.9 percent in the third.  GNP includes, and GDP excludes, net receipts of income from the rest of the world, which decreased $36.7 billion in the fourth quarter after increasing $3.9 billion in the third; in the fourth quarter, receipts decreased $21.8 billion, and payments increased $15.0 billion.”

[Note to teachers: A Federal Reserve Bank of St. Louis publication clarifies 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 3.8 percent, or $143.3 billion, in the fourth quarter to a level of $15,319.4 billion.  In the third quarter, current-dollar GDP increased 4.4 percent, or $163.3 billion.” This is the size of the nation’s GDP in today’s (current or nominal) dollars.

U.S. Gross Domestic Product for the Full Year of 2011

In addition to the regular quarterly real GDP estimate, the BEA adds to this report the annual averages for 2011.  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.

  • U.S. Real GDP “increased 1.7 percent in 2011 (that is, from the 2010 annual level to the 2011 annual level), compared with an increase of 3.0 percent in 2010.”

“The increase in real GDP in 2011 primarily reflected positive contributions from personal consumption expenditures, exports, and nonresidential fixed investment that were partly offset by negative contributions from state and local government spending, private inventory investment, and federal government spending.  Imports, which are a subtraction in the calculation of GDP, increased.”

“The deceleration in real GDP in 2011 primarily reflected downturns in private inventory investment and in federal government spending and a deceleration in exports that were partly offset by a deceleration in imports and an acceleration in nonresidential fixed investment.”

“Real GDI increased 2.1 percent in 2011, compared with an increase of 3.6 percent in 2010.

The price index for gross domestic purchases increased 2.5 percent in 2011, compared with an increase of 1.5 percent in 2010.”

“Current-dollar GDP increased 3.9 percent, or $567.5 billion, in 2011 to a level of $15,094.0 billion.  In 2010, current-dollar GDP increased 4.2 percent, or $587.5 billion.”

Figure 2, below, shows the current dollar and constant dollar GDP data from 2000 through 2011. 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.  

figure 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. Also note the difference between the 2011 current dollar and 2011 constant dollar GDP.  The difference is the result of inflation.

[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.]

U.S. GDP in 2011 = $15.094 trillion - about $48,442 per capita.

The Census Bureau estimated the U.S. population to be 311,591,917 the end of 2011. Dividing the current dollar GDP by the population determines the  per capita (per person) GDP.

[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 3, below, illustrates a "typical" business cycle, with periods of expansion, peak, decline and trough. 

figure 3

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, 2012.

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.

“The Conference Board Leading Economic Index® (LEI) for the U.S. increased 0.7 percent in February to 95.5 (2004 = 100), following a 0.2 percent increase in January and a 0.5 percent increase in December.”

Ataman Ozyildirim, Economist at The Conference Board comments on the meaning of the LEI, “Continued broad-based gains in the LEI for the United States confirm a more positive outlook for general economic activity in the first half of 2012, although still subdued consumer expectations and the purchasing managers’ index for new orders held the LEI back in February. The CEI for the United States, a measure of current economic conditions, has also been rising as employment, income, and sales data all continue to improve. Industrial production, however, has not yet picked up strongly.”

Says Ken Goldstein, economist at The Conference Board: “Recent data reflect an economy that improved this winter. To be sure, an unseasonably mild winter has contributed to many of the recent positive economic reports. But the consistent signal for the leading series suggests that progress on jobs, output, and incomes may continue through the summer months, if not beyond.”

“The Conference Board Coincident Economic Index®(CEI) for the U.S. increased 0.2 percent in February to 104.0 (2004 = 100), following a 0.2 percent increase in January and a 0.6 percent increase in December.”

“The Conference Board Lagging Economic Index®(LAG) increased 0.2 percent in February to 114.1 (2004 = 100), following a 0.5 percent increase in January and a 0.2 percent increase in December.”

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.]

CONCLUSION

Figure 4, below, shows the changes in the major components of U.S. gross domestic product from 2008 to 2011, and the levels of those components in 2011. 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. 

figure 4


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 www.Recovery.Gov web site reports that from Q3 2009 through Q3 2011, stimulus programs created 5,448,388 jobs.

ASSESSMENT ACTIVITY

Have your students click the start button below to complete an interactive quiz on the GDP lesson.

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."]

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 Consumer Confidence Index Decreases," March 27, 2012.  http://www.conference-board.org/data/bci/index.cfm?id=2160

Global Indicators

The Conference Board, "Global Economic Outlook, 2012,"http://www.conference-board.org/data/globaloutlook.cfm Global Business Cycle Indicators