leading economic indicators
 
Economic indicators are generated from statistical economic breakdowns. For instance, if you were to find out that in Vancouver, the amount of coffee consumption was rising by 20% per annum, you may want to invest in beans or Canadian companies servicing the industry in Vancouver. This statistic, however fanciful, would be considered to be an economic indicator. There are many economic indicators that affect an investor’s decision during the buying and selling processes. The market varies according to these indicators and fluctuates either up or down affecting share worth and buying power. Therefore, it would be prudent for the investor to familiarize themselves with the mechanics of the market and the factors that affect its fluctuation. There are many indicators to be aware of from general economic factors to the specific share-specific factors. It is the responsibility, if not the duty, of the investor to fully inform him or her of what indicators will affect their investments. Therefore the following is only an introduction to some of the leading economic indicators today.

Four Leading Economic Indicators

 

Unemployment indicators

are based on the number of available jobs versus the number of available individuals capable of filling those positions. This figure affects the unemployed individual by curtailing their spending and investment power. Also tax spending in the area maybe affected (building roads, installing services), affecting utility rates, thus affecting the companies providing those services. This in turn works up into the web of the stock market and fluctuates the numbers according.

Bankruptcy rates

affect the movement of the Canadian stock market. For example, what if Whistler, BC, experienced a long-lasting micro pandemic – something that caused the internationally known ski village to close its doors of business. With so many out of work and unable to resell their homes, the bankruptcy rate would rise dramatically. Bankruptcy is a protection that every Canadian enjoys, but it is a safety that comes at a cost for the bankrupt individual and the companies forgiving the individuals debts. This can affect spending, company growth, job creation – the affects seem to be endless.

Gross Domestic Product

is a term many have heard but not many understand. This indicator or statistic is derived from a formula involving a country economic performance. For instance, if you wanted to arrive at the number of Canada’s GDP, you would add the valued amounts of Canadian consumption, Canadian business investment, Canadian government spending (infrastructure) and the resulting difference of Canadian exports and imports. Sounds pretty complicated but it gives you the relative health of a country’s economy. You can find GDP figures through Statscan and other Canadian online statistical sources.

Consumer Price Index

is the statistic derived from taking the difference between the total household income versus products or provided services intended for personal for that household. An example, let’s say that Winnipeg every household brings in $100,000 (if only it were true) and spends 80,000 a year. They would a CPI of $20,000 per household – a good thing to know if you’re investing in a water park development outside of town.

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