Economic Condition Essay

3168 Words Apr 15th, 2014 13 Pages
Question 1
There are many different ways to measure the performance of the economy. Economic indicators are the tools we use to measure this performance or forecast future performance. Some indicators are broader than others, some focus on specific industries. It is important to look at variety factors to assess the overall health of the economy. I have analyzed ten different factors in order to as gauge the current state of the United States economy.
The consumer price index measures the average change in the prices paid by urban consumers for all goods and services purchased for consumption by urban households. The CPI lets us compare what a certain group of goods and services cost the average consumer this month compared to last month
…show more content…
Year-ago core inflation improved slightly to 1.8%, but it remains well below the Federal Reserve’s 2.5% threshold for reversing accommodative monetary policy.
The producer price index is a group of indices that measures the average changes in prices domestic producers receive for their goods. The PPI tracks changes in prices for nearly every goods-producing industry in the domestic economy, including agriculture, electricity and natural gas, forestry, fisheries, manufacturing and mining. There are three primary publication structures for the PPI: industry; commodity; and stage-of-processing, with the stage-of-processing structure most commonly used for economic analysis. Products are organized by material composition or similarity of end uses and prices of products from the same industry are computed together. Financial markets observe the PPI for finished goods closely because it is an important indicator of wholesale and commodity price pressure, and because it usually signals an upcoming change in the consumer price index. An increase in producer prices usual foreshadows a rise in the CPI, which means that it can give us a good idea of what to expect for future inflation.
Just like the CPI, the core PPI excludes finished food and energy goods. The PPI rose 0.3% in August after a very calm July. However, the year-ago change moderated to 1.4%, more than a percentage point under the 2013 peak of 2.5% in June. The

Related Documents