Economic Progress
Tracking the progress of our economy. How do we do it?
Inflation or a rising of prices throughout the whole economy is measured through the CPI or Consumer Price Index. The CPI spending represents approximately 87% of the spending population of the United States. The CPI is obtained by collecting data from families. Everytime a participating family buys an item kept track of for the CPI, it logs the price and turns it into the government sometime. The goods and services that are watched include:
FOOD AND BEVERAGES (breakfast cereal, milk, coffee, chicken, wine, full service meals and snacks)
HOUSING (rent of primary residence, owners' equivalent rent, fuel oil, bedroom furniture)
APPAREL (men's shirts and sweaters, women's dresses, jewelry)
TRANSPORTATION (new vehicles, airline fares, gasoline, motor vehicle insurance)
MEDICAL CARE (prescription drugs and medical supplies, physicians' services, eyeglasses and eye care, hospital services)
RECREATION (televisions, cable television, pets and pet products, sports equipment, admissions)
EDUCATION AND COMMUNICATION (college tuition, postage, telephone services, computer software and accessories)
OTHER GOODS AND SERVICES (tobacco and smoking products, haircuts and other personal services, funeral expenses)
After the data is collected for the governments basket items an average is compiled and then compared to the previos months average. The difference between the two averages is the inflation rate. This is used by the government to tell what the value of money is and what peoples spending habits were for an amount of time.
Gross Domestic Product is the measure of goods produced in the US economy that are purchased by foreign and domestic consumers.The GDP consists of 5 major categories that include personal consumption expendatures, capital investment, government purchases, and trade(exports, and imports). After spending for the 5 categories is determined they are added together to determine the GDP. A second way to determine GDP is by adding together all domestic labor earnings plus the costs associated with production that are not income.The GDP is considered by most people to be the best monitor of what a countries economy is doing. The GDP is also used by many econonmists to determine what a countries GDP by the population of a country. This is called GDP per head and if it raises a countries standard of living is said to be rising. Obviosly a country wants it GDP to be steady or rising. Any lowering of the GDP indicates a struggling economy.
Unemploymentis the measure of jobless people in the United States who are currently seeking to be employed. Only those seeking to work are measured by unemployment, being it is a requirement to recieve unemployment. Since not all people apply for benefits, or their benefits run out,the government uses the Current Population Survey (CPS) to determine the number of jobless people in the US. The government uses unemployment to determine how well the economy did during a time period. Unemployment is used as an economic indicator by determining whether the economy lost jobs, created jobs, or remained relatively stable.
Although inflation, unemployment, and GDP are all indicators of the economy, we really have to use all three together to tell how the economy is doing as a whole. One indicator may be show good things while another is doing terrible. This is kind of like a system of checks and balances. The government is trying to investigate all aspects of our economy to try and correct the problems we come across with it.
Related Websites
Economic Statistics
Government Website
The White House Briefing Room
Email: schott_@msn.com
