Economic indicator is a number that shows how well an economy is performing. Such numbers measure a variety of factors, including the production of goods and services, employment conditions, and consumer needs, beliefs, and behaviors. Economic indicators help governments, businesses, and the public understand economic conditions and make informed decisions.
The most widely used economic indicator is gross domestic product (GDP). GDP is the market value of all goods and services produced within a country during a given period. GDP excludes production by facilities that are owned by a nation’s citizens but operate in other countries, and it includes production by foreign-owned facilities within the country. Some economists use a similar measure, called gross national product (GNP), instead of GDP. GNP includes all production by a nation’s firms, regardless of the firms’ locations, and excludes production by foreign-owned facilities.
Other economic indicators include unemployment rates, consumer confidence measures, and price indexes. An unemployment rate represents the percentage of jobless individuals in a community’s total labor force—that is, in the segment of the population that is willing and able to be employed. Consumer confidence represents consumers’ beliefs and expectations concerning the economy. Measures of consumer confidence are based on information gathered in surveys. Price indexes represent the prices of various items. Some price indexes track changes in the cost of living—that is, the amount of money needed to buy a standard amount of consumer goods and services.
See also Consumer Price Index ; Cost of living ; Gross domestic product (GDP) ; National income ; Unemployment .
