Personal Income and Spending - Essay Example

Task Introduction Economics essentially is a social science which examines production, distribution, as well as the consumption of the various goods and services that are in an economy. In so doing, economics incorporates a review of varied pieces of information thereby coming up with financial estimates or economic indicators. These indicators are very essential as far as enhancing a better understanding as to the health of the economy is concerned. 1) Which government agency or private group manages the economic indicator data?

Economic indicator data is collected by two bureaus namely Bureau of Economic Analysis BEA and the United States Census Bureau. It is however managed and released by the Economics and Statistics Administration (ESA) on quarterly as well as the 12-monthly basis for use by businesses, corporations and investors when making decisions. 2) How is the economic indicator calculated? Is it a formula, is it a survey or does the raw data come from other independent sources? Economic indicators essentially refer to statistical data that show the past as well as future trends pertaining to the economic condition of a particular country.

These indicators may be calculated by the various government agencies, watchdog groups and think tanks on the grounds of the available financial information of that particular country. In fact, government agencies have been considered a force to reckon with as far as calculation of economic indicators is concerned. Economic indicators are used by businesses and individuals in making financial decisions. The financial decisions may be relating to saving money, financial investments to make, acquisition of new assets as well as other crucial decisions.

Economic indicators are of three types. There is coincident, leading and lagging indicators. Coincident indicators are calculated the same time as the occurrence of an economic event. Lagging indicator pertains to things that were in the past while leading indicators are made in an attempt to make predictions about future events. An example of leading indicators is the speculation of commodity features or bond yields. 3) What has happened to the macroeconomic over the past two years? Macroeconomics involves examining the economy collectively and not as according to individual actors.

It is essentially about the performance of the whole economy on aggregate in terms of the overall GDP, inflation, as well as deficit or surplus. Over the past two years, there has been a decrease in the overall GDP. There has been a decrease in Government spending, which has also lowered the output of the economy. Unemployment has also risen tremendously due to the cuts in government spending as investors withhold their investment for speculative purposes. Deficits have been increasing while inflation in the prices of various goods and services has been on an all-time high. 4) What is happening today with the macroeconomic indicator?

With the decrease in GDP and real output, the macroeconomic indicator has been on a downward trend. 5) What is your 12-month prediction for the macroeconomic indicator? Will it go up or down? Why? Explain the logic of your prediction? In the next 12 months, the economic indicator will be going up. There has been an indication as to an increase in government spending in the coming days. In this case, this will increase the consumption and the overall output of the economy which will push the indicators on an upward trend. 6) Do you trust the macroeconomic indicator?

Is the data reliable or do you have a suspicion or hard evidence to show that the data is being manipulated? Government agencies have proved to be a force to reckon with as far as generating factual and true information on the economy is concerned. In this case, I have absolutely no reason to suspect that the data has been manipulated. In addition, all the parties concerned have come up with more or less the same information pertaining to the indicator. 7) Why should company managers or investors pay attention to macroeconomic indicators?

Is it a good idea for company managers to do a formal review of key macroeconomic indicators every quarter (every 3 months) or is it a waste of time? Any investor who ignores macroeconomic indicators at their own peril. There are various reasons why they should pay attention to indicators. They point at the direction in which the economy will headed thereby assisting them decide whether to invest or hold onto their money. Indicators are also useful in showing the trend in prices of commodities, therefore, triggering decisions as to how to prevent inflationary growth in the future.

They show how the current economic conditions would boost inflation in the future. Indicators also help individuals and companies gauge the export or import ability of a nation. In this case, they will be able to look for the emerging markets that have impressive economic growth thereby exploiting the markets. Works Cited http://smallbusiness.chron.com/economic-indicators-used-analysts-3877.html How Are Economic Indicators Used by Analysts? by Osmond Vitez, Demand Media http://www.markets.com/education/fundamental-analysis/main-economic-indicators.html