what is a leading economic indicator that businesses should pay careful attention to?
A detailed study of economics is required to understand the business conditions of an organization or a country. The success of any business system in a country depends on its economical and political condition. Study of economics can be of two types’ macroeconomics and microeconomics. Macroeconomics deals with the study of economic conditions of a country and microeconomics deals with economic condition of an individual or organization. Any business in a country should pay attention on few economic indicators and the important among them is the Price index.
Typical economic measures like Inflation, Deflation, Disinflation and Stagflation can decide the Price index. General rise in price of goods and services at a given point of time is known as Inflation. The growth of inflation is a bad indicator to any sort of business across the country and thus pulls the economy growth back. Disinflation can be considered as the reverse scenario of Inflation, where there will be a slow growth in prices. Deflation is the case, where the prices are coming down over the time and this raises when people are not in a condition to purchase the goods that were being produced by organizations. Stagflation is the scenario where there will a down in economy of the country and hike in prices. The primary Price indices that affect the economy are Consumer Price Index (CPI), which is the measure of inflation and deflation on a monthly scale. Many factors like Salaries, wages and interest rates are based on this CPI. The Producer Price Index (PPI) is the measure of price at a whole sale level.
There were few other economic indicators, as below
- Retails sales
- Personal Income
- Gross Domestic Product (GDP)
- Unemployment Rate