economic indicators

  • Because of the importance of understanding the status of the economy today to be able to predict the future, not all indicators need to be leading the economy. This means that not all indicators included in the approach will have strong predictive abilities. But as this is a forecasting approach, the assessment of the different indicators will always point towards their possible implications for the future.

  • After the introduction to economic indicators in section : macroeconomic forecasting through economic indicators, this section will look at the possibilities of predicting the recession starting in December 2007 using these indicators. Again it is important to remember that as this paper is written ex. post with revised data and a broad understanding of what went wrong1, it could easily be pointed at numerous of relatively detailed and complicated indications that something was fundamentally wrong with the US economy ahead of the recession.

  • Even though the different business cycles can be described through relatively simple models such as the one explained in section ( U.S. business cycles ), the underlying reasons for the developments and the amplitude of the business cycles seems to be changing with each cycle. Wesley Clair Mitchell who was one of the early researchers of business cycles and leaders of NBER stated that; “since each business cycle in a sense is unique, a thoroughly adequate theory of business cycles, applicable to all cycles is unattainable” (Dua 2004, Page 1).

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