what are economic indicators 
economic indicators detail a country s economic performance published periodically by governmental agencies or private organizations economic indicators often have a considerable effect on stocks employment and international markets they may predict future economic conditions that will move markets and guide investment decisions the gross domestic product gdp is considered the broadest measure of a country s economic performance it calculates the total market value of all finished goods and services produced in a country in a given year in the u s the bureau of economic analysis bea also issues a regular report during the latter part of each month 3 many investors analysts and traders focus on the advance gdp report and the preliminary report both issued before the final gdp figures because the gdp is considered a lagging indicator meaning it can confirm a trend but can t predict a trend the gdpnow forecasting model used by the federal reserve provides a nowcast of the official estimate before its release by estimating gdp growth using a methodology similar to the one used by the u s bureau of economic analysis 4reported by the u s department of commerce doc during the middle of each month the retail sales report measures the total receipts or dollar value of all merchandise sold in stores 5 sampling retailers across the country acts as a proxy of consumer spending levels consumer spending represents more than two thirds of gdp proving useful to gauge the economy s general direction 6the industrial production report released monthly by the federal reserve reports changes in the production of factories mines and utilities in the u s one measure included in this report is the capacity utilization rate which estimates the portion of productive capacity that is being used rather than standing idle in the economy capacity utilization in the range of 82 to 85 is considered tight and can increase the likelihood of price increases or supply shortages in the near term levels below 80 are interpreted as showing slack in the economy which may increase the likelihood of a recession 7the bureau of labor statistics releases employment data in a report called the nonfarm payrolls on the first friday of each month 8 sharp increases in employment indicate prosperous economic growth and potential contractions may be imminent if significant decreases occur these are generalizations however and it is important to consider the current position of the economy the consumer price index cpi also issued by the bls measures the level of retail price changes and the costs that consumers pay and is the benchmark for measuring inflation using a basket that is representative of the goods and services in the economy the cpi compares the price changes month after month and year after year 9 this report is an important economic indicator and its release can increase volatility in equity fixed income and forex markets greater than expected price increases are considered a sign of inflation which will likely cause the underlying currency to depreciate economic systemsfive economic systems illustrate historical practices used to allocate resources to meet the needs of the individual and society in primitive agrarian societies individuals produced necessities from building dwellings growing crops and hunting game at the household or tribal level a political and economic system of europe from the 9th to 15th century feudalism was defined by the lords who held land and leased it to peasants for production who received a promise of safety and security from the lord with the advent of the industrial revolution capitalism emerged and is defined as a system of production where business owners organize resources including tools workers and raw materials to produce goods for market consumption and earn profits supply and demand set prices in markets in a way that can serve the best interests of society socialism is a form of a cooperative production economy economic socialism is a system of production in which there is limited or hybrid private ownership of the means of production prices profits and losses are not the determining factors used to establish who engages in the production what to produce and how to produce it communism holds that all economic activity is centralized through the coordination of state sponsored central planners with common ownership of production and distribution schools of economic theorymany economic theories have evolved as societies and markets have grown and changed however three disciplines of economics neoclassical keynesian and marxian have influenced modern society the principles of neoclassical economics are often used as a framework to illustrate the virtues of capitalism including the tendency of market prices to reach equilibrium as the volume of supply and demand changes the optimal valuation of resources emerges from the forces of individual desire and scarcity john maynard keynes developed the theory of keynesian economics during the great depression arguing against neoclassical theory keynes showed that restrained markets and government intervention in markets create a stable and equitable economic system he advocated for a monetary policy designed to boost demand and investor confidence during economic downturns marxian economics is defined in karl marx s work das kapital marxian economics is a rejection of the classical view of economics arguing against the idea that the free market an economic system determined by supply and demand with little or no government control benefits society he espoused that capitalism only benefits a select few and that the ruling class becomes richer by extracting value out of cheap labor provided by the working class 10