On today show, we are going to look at two different words that are used to describe macro economic factors, and in each case we’re going to look at an important distinction in the nature of these anomic indicators. We’re going to start by looking at economic data generally. Economic data breaks down into two major categories. There is what is called soft data and hard data. hard data consist of the consumer price index, gross domestic product, gross, domestic income, the producer, price index, the unemployment rate, and labor, force, participation, there’s a long list of data, that is compiled and reported by the Bureau of Labour Statistics in United States, Statistics Canada in Canada, and Eurostat in Europe.
These numbers tend to be lagging indicator’s.
In addition to the hard data, there is a rich array of soft data about the economy. These are things like indices of consumer confidence the purchasing manager index. These numerous measures communicate the sentiment of consumers and business owners about how they feel in the current market conditions in addition to their outlook for the coming months. These are, however, just opinions. They are surveys. Opinions are influenced by factual information to be sure. but opinions are also influenced by other factors. The second reason why consumer confidence might provide useful early information is if consumers’ responses to the survey questions provide good forecasts of future economic activity. This would occur if consumer confidence has a causal influence on economic activity, but this influence takes several months before it is fully realized.
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Host: Victor Menasce