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Economics & Economic Indicators Bloomberg Notes

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Economic Indicators: ❖ Use GDP (economic indicator) to gauge the economy and predict the future ❖ Essential economic indicators: Economic growth, inflation, unemployment, business confidence, housing ❖ GDP: Market value of all final goods produced within a given country ➢ GDP=C+I+G+(X-M) ❖ Nominal GDP Growth (%) - Inflation (%) = Real GDP Growth (%) ❖ Recession: Two successive quarters of negative real GDP growth ❖ Real GDP growth is the main gauge of economic health ❖ Economic growth is cyclical, with a series of booms and busts ❖ Investors interpret the economy through economic indicators ❖ Leading indicators attract the most investor interest Monitoring GDP: ❖ PMI (economic indicator that surveys purchasing managers) ❖ GDP estimation by governments is a time-consuming, periodic activity ❖ GDP arrives too late to be useful to investors ❖ Instead, investors gelan GDP growth through more timely indicators ❖ The indicators that are released first attract the most attention Forecasting GDP: ❖ Analysts forecast key economic indicators ❖ Long-term economic estimates are foundational to financial models ❖ Changes in estimates illustrate economic optimism and pessimism ➢ Significant changes in estimates may herald an economic turning point ➢ Investors compile many indicators rather than one to predict turning points *Real GDP growth is the main measure of an economy *More timely indicators offer the most insight to investors *Indicators can f ...
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