Economic Conditions: Trying to Read the Future (1/2)

Economics and weather have a lot in common. Knowing what conditions will be like weeks or months in the future is not easy. One thing that helps economists predict the future is the index of leading economic indicators.

An index is a way to measure changes in a group of numbers over time. In financial markets, for example, an index of stocks will rise or fall with changes in the wider market. The changes measured by an index can be represented with a single percentage.

The index may start at a base period of time with a value of one hundred. Now say that a month later the value is recorded as one hundred one. That means it gained one percent. If the index lost one percent, however, the value would be 99.

The leading economic indicators are really 10 indexes. Four deal with manufacturing activity. One deals withunemployment" class="hjdict" word="unemployment" target=_blank>unemployment claims. Another measures people's expectations of the economy. Still others involve financial information like the money supply and interest rates.