This document provides an introduction to economic indicators for journalism students. It defines economic indicators as data used to evaluate the health of an economy. It discusses established indicators like the Consumer Price Index and copper prices. It also categorizes indicators as lagging, coincident, or leading in relation to economic activity. The document advises that good indicators are original, measure important economic activity accurately and consistently, and correlate closely with broader economic measures. It gives some hypothetical alternative indicators as examples from past classes.

1. Economics for Journalists
Tutorial 1: Intro to Economic Indicator Project
Jeffrey Timmermans
Tuesday, 5 February, 13

2. What’s an “economic indicator”?
✤ Data about some kind of economic activity that helps governments
and citizens evaluate – and occasionally predict – the overall health of
their country’s economy.
✤ “A piece of economic data, usually of macroeconomic scale, that is
used by investors to interpret current or future investment
possibilities and judge the overall health of an economy.”
– Investopedia
Tuesday, 5 February, 13

3. Some long-established indicators
✤ Consumer Price Index: tracks changes in prices of consumer goods
(i.e. inflation)
✤ Price of copper: copper is the “backbone” of an industrial economy,
yet supply is relatively stable and not that sensitive to price changes.
✤ Book-to-bill ratio: measures to ratio of orders of a product to
shipments of that same product over a given time period. A ratio over
1 indicates an order backlog (i.e. indicates an economic expansion)
✤ Ted spread: measures how much more banks have to pay to borrow
money than the government pays (i.e. indicates the health of banks)
Tuesday, 5 February, 13

4. Types of indicators
✤ Lagging: an indicator of activity in the recent past (i.e. changes after
the broader economy changes)
✤ Coincident: indicates activity in the present (i.e. the current state of
the economy
✤ Leading: an indicator of future economic activity
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5. What makes a good indicator?
✤ Is original
✤ Measures an interesting and important economic activity
✤ Measures that activity in an accurate and consistent manner
✤ Closely correlates with a broader measure of the economy in a
statistically significant way
✤ Considers other possible factors that might interfere with its accuracy
Tuesday, 5 February, 13

6. Examples from past classes
✤ Wedding Dress Indicator: measures the health of the economy by
comparing the spending on wedding dresses with the change in the
annual number of registered marriages
✤ Premium-to-Standard Petrol Indicator: predicts consumer confidence
by measuring the ratio of purchases of premium auto fuel to standard
fuel
✤ Gym-membership Indicator: attempts to measure unemployment by
looking at the change in numbers of gym memberships
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7. A bad indicator
Source: Bloomberg BusinessWeek
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8. A worse indicator
Source: Bloomberg BusinessWeek
Tuesday, 5 February, 13

9. Totally off-the-wall indicator
Source: Bloomberg BusinessWeek
Tuesday, 5 February, 13

10. Please refer to the Economic Indicator Project
page on the course blog for details on the
requirements, deadlines and assessment
criteria
Tuesday, 5 February, 13