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How Economic Indicators Help Small Business Owners Understand the Economy

The Current State of the Economy - CPI, GDP, Unemployment, Stock Prices

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We need to look at stock prices. We’ve seen an uptick in stock prices in April and May which is always good news. When stock prices go up, it signifies investor confidence. We have to hope that this isn’t a “sucker’s rally,” but a real rally. Stock prices go right along with consumer confidence. The best news in these economic indicators is that consumers are becoming more confident that we are nearing the bottom of this recession and perhaps the economy is going to start getting better. There are other important economic indicators released by a variety of agencies including the Federal Reserve, the Conference Board, the Census Bureau and others, but these are the most important ones.

The Chair of the Federal Reserve, Ben Bernanke, recently predicted a turnaround in the economy later in 2009. He said that he expects economic activity to bottom out this year and the economy to show weak growth late in 2009. He says that he sees hopeful signs in the economy including some improvement in consumer spending, home sales, and improvement in bank lending conditions.

When you hear the economic indicators quoted on television or read them on the Internet, don’t just dismiss them. They really do help us understand and predict economic activity and will help you understand what is going on in the economy on a monthly and quarterly basis.

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