Topic > Economic growth and economic indicators - 711

Economic growth is measured by the change in real GDP. Real GDP is the total value of all goods and services produced in a year, adjusted for inflation. GDP, while not the best indicator of quality of life, nations with high GDP correlate with nations with higher quality of life. Changes in real GDP for 2013 general trend towards an increase in GDP and therefore an increase in economic growth. The latest estimate for the fourth quarter of fiscal 2013 predicts a change in GDP of 2.4%. GDP increased in quarters 1-3 of 2013 but decreased in the fourth quarter. The decline in the fourth quarter could be problematic for continued economic growth, but the overall trend of increasing GDP offsets this concern. (see Index 1)Consumer ActivityRecent changes in economic indicators tracking consumer activity suggest; that economic growth is occurring, as evidenced by an increase in personal disposable income and consumer expectations of the economy. Economic indicators that monitor consumer activity are the Consumer Confidence Index (CSI), Personal Consumption Expenditure (PCE), and Real Personal Disposable Income. The CSI measures consumer confidence in the current economy, the future economy, and consumers' financial health. The CSI can therefore illustrate how much consumers are willing to consume and how much they are willing to save. Low levels of confidence may result in lower consumption of goods and services as consumers may feel that they are not financially stable or the current economic situation is not conducive to spending. Consumers could therefore save more money. If consumers spend less, there will be a decrease in real GDP since consumer spending makes up two-thirds of GDP. The PCE measures total spending on consumer goods and services...... half of the paper ......also increases in December 2013 while both the change in PCE and PDI decrease in December 2013. The increase to December 2013 CSI can be explained by the continued increase from October 2013 to November 2013. Consumer confidence continued to increase then because consumers felt confident in an increase pattern. The CSI then decreased in January 2014 in response to the decrease in PDI and PCE in December 2013. PDI and PCE both increased in January 2014. For all three indicators, the overall trend is a positive upward trend. CSI has one more data point for February 2014 and therefore all current data shows an increase from the previous data point. This indicates an increase in spending due to the increase in disposable income which in turn will create an increase in consumer confidence. It therefore appears that indicators of consumer activity are pointing towards economic growth.