These committees and agencies all look at numerous economic indicators. As its name suggests, an economic indicator is a number that gives people an idea of how their economy is doing. A few major economic indicators are the producer price index, consumer price index, jobless claims, new factory orders, durable goods report, and housing starts.

The Producer Price Index and the Consumer Price Index

The producer price index (PPI) and the consumer price index (CPI) are two heavily watched indicators that gauge the economy's inflation. The PPI measures the change in the costs of producing a good while the CPI measures the change in cost of buying that good. Rising PPI or CPI numbers suggest that inflation is rising so the government intervenes to help slow the inflation.

Jobless Claims (Unemployment)

The jobless claims (unemployement) report is also extremely important in judging the health of the economy. This report indicates the amount of people filing for unemployment and gives people an idea of how many people are losing their jobs. A strong and growing economy has a higher need for workers so during this time the jobless claims report should be farely low. But during a slow economy, many companies need to lay off more workers in order to stay in business so during this time the report should be higher than usual.

New Factory Orders

This report gives people an idea of how people feel about the economy. It does this by recording the dollar amount of orders reported by manufactures. Rising orders indicate that people are confident about the economy while declining orders shows that people are starting to feel uncertain and less willing to spend their money.

The Durable Goods Report

This is another report that shows the consumers' confidence about the economy. This report measures the amount of orders for durable goods such as cars, airplanes, home appliances, and so forth. When the economy is strong and people are confident, they are more likely to purchase more expensive products such as durable goods but when the economy is at a point where consumers are uncertain, there are less orders made.

Housing Starts

The housing starts report is another extremely important indicator of the economy's health. This report measures the amount of building permits issued and determines the demand for new housing. An economy that is growing rapidly has an increased demand for housing. Economies that are slowing can usually be told by a decline in the housing starts report.

These indicators provide excellent ways of determining the future of our economy and can help you with a few of your financial decisions. But many people often blow these numbers out of proportion which can make the short-term more volatile. We cannot stress enough to not worry too much about the short-term and keep your focus on what your long-term goals are. Holding your investments through these small bumps in the stock market is usually the best way to go.