Indicators

1. Which of the indicators that he reviews seems to you to be the most useful in predicting the economy? Why?

The most important indicator that is used in the prescribed reading is the Consumer Confidence indicator. I chose this one because for many American's or for that sort people in itself, they have no idea of the true make-up of economic structure may be. The current deficit accounts, Employment Report, Purchasing Managers Index, Leading Economic indicators, exchange rates and bond yields, are just words thus Consumer Confidence seems to be the simplest form of economic concepts that nearly every American can clearly relate to and understand the intent of the theory being delivered or addressed.

Consumer Confidence is associated to consumer spending and this is without doubt a basis of economic governance. Consumers are said to account for two-thirds of economic activity and a confident consumer is said to spend than a cautious consumer. Because of this reason alone, it's important to have something that can address the concerns of the consumers spending, because this is the type of gauge that can better assess the economy's spending habits and more than likely predict the probability of a recession. The monies being spent in the economy is more important that any of the other indicators noted in our reading.

Employment Report, while important because it is said that it is a good measure of performance for a specific sector and a good indication of the overall health of that sector. The employment situation is a set of labor market indicators and the unemployment rate measures the number of unemployed as a percentage of the labor force. Jobs create money and money creates a better sector for work and spending, but that's not always a good form of determining the strength of that sector. Some families have only one person working within that family and the bread winner of that family may be making enough money to comfortably take care of the spending needs of that particular family. Take for example a family of four whereas the husband is the sole income provider in the household. His income is such that his wife needs not work unless she really wants to, thus she stays at home and is a Home Care Provider. Does this mean that the Man of the House is the only one to spend money in the economy? More than likely it is the wife who will be spending most monies in the economy, because she is the one caring for the family while the husband works. Her spending will or course is determined by budget, but also by consumer confidence in knowing her husband has a comfortable income to provide for the family. This indicator leads me toward the employment sector, thus no better indicator to address than the Purchasing Manager's Index.

While the Purchasing Manager's Index is important on it own, it too isn't as important as the

Consumer