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Economic Indicators for 2010
After two years of a severe economic recession, the worst since the Great Depression, the question
is will the economy improve in 2010? There have been conflicting opinions and viewpoints from economists and financial experts
on the state of the economy for 2010. While it is unclear what the status of the economy will be in the future, there are several
factors that we can analyze to determine the future successes/failures of the economy, as described below:
1. Unemployment Rate
– This is, without question, the most important economic indicator. The Labor Department recently released the latest
unemployment date for December 2009. While the jobless rate remained at 10% (as it was in November 2009), the economy shed 85,000
jobs in December. If people aren't working, they can't pay their mortgage, therefore causing widespread foreclosures. In
order to get this economy back on track, the jobless rate must drop. The problem is the fact that the 10% unemployment rate
does not include those who’ve given up looking for work and it does not take into account those who were fired from their jobs, but
are now working at a much lower salary.
2. Housing – The real estate market is another key economic indicator. According
to RealtyTrac, there were about 3 million foreclosures in 2009 – up higher than 21% in 2008! Not to mention the fact that if
anyone on your block is in foreclosure, the value of your home, even if you are no where near going into foreclosure, will dramatically
decrease. Anyone who is currently behind on their mortgage payments has a great chance of facing foreclosure in the next several
months (see our Real Estate section for more info about preventing foreclosures). Foreclosures, negative home equity and a growing
number of short sales and loan modifications are all signs that the economy is down.
3. Stock Market – This is an
economic indicator that is taken too seriously. The Dow Jones Industrial Average fluctuates every day and is often very unpredictable. When the Dow is up, people think the economy is doing great – then two weeks later, if the Dow is down, people then become concerned
about the economy – even if they don’t have any money invested in the markets. The fact is while the stock market is important,
it should not be perceived as the sole indicator of future economic success.
4. Consumer Confidence – This economic indicator
goes along with the previous one about people’s perception of the success/failure of the economy. For the economy to flourish,
consumers must be confident about the status of the economy in the future. If consumers are worried, scared and begin to panic,
they will prolong their decision to buy a home, for example (even if they can afford it now) and they may make other decisions like
getting out of the stock market at the low point.
These are some key economic indicators that can give us an accurate
idea of future economic performance. Despite the indicators, the economy is spontaneous and unpredictable.
