Question

In: Economics

Which government agency or private group manages the economic indicator data? How is the economic indicator...

Which government agency or private group manages the economic indicator data?

How is the economic indicator calculated? Is it a formula, is it a survey, or does the raw data come from other independent sources? Be detailed in your explanation.
   
What has happened to the macroeconomic over the past two years?

Solutions

Expert Solution

Economic indicator is a metric which is used to measure and evaluate the overall health of the economy. These indicators are often collected by a government agency or some private business intelligence firm. It is collected in the form of survey or census which is analysed further and then the economic indicators are generated.

All the financial analysts and investors keep track about the macroeconomic indicators as the changes in economy is a source of systematic risks which can affect the working of companies.

The NAICS (North America Industry Classification System) organises the categories for collection of information on production levels, employment rates, backlog, etc. The information collected by them can be then used to forecast the overall business confidence and helps in making future decisions.

There are various types of indicators. The primary economic indicator is GDP, it consists of,

  • Consumptions
  • Net exports
  • Investment
  • Government expenditure

Then there is Purchasing Manager's Index(PMI). This is the most followed economic indicator.

Next is CPI (Consumer Purchasing Index)

The indicators like yield curve, net business formation, share price, etc are more useful in predictions of future movements of economy. The economic indicators is only helpful if it can be correctly interpreted. The most important indicators can be classified as,

Hence, economic indicator is not just one figure, it is a group of indicators which can bd calculated or studied by collecting data through survey or census.

Global growth was projected 3.2% in 2019. Softening inflation and weaker than anticipated global activities was the macroeconomic situation in 2019. Whereas this year, the GDP rates are most unlikely to exceed the potential. But due to the pandemic, there was a sharp contraction in economic activities since March 2020. This resulted to nearly 5% reduction in annual rates of year's first quarter and 31.4% in second one. The pandemic has created a recession in 2020.The rates are improving gradually, but the pandemic had a bad affect on people's employment and the economic activities, so this year ia expected to give less growth rates.


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