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Tutorial1 Presentation Transcript

  • 1. Economics for Journalists Tutorial 1: Intro to Economic Indicator Project Jeffrey TimmermansWednesday, 8 February, 12
  • 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.” – InvestopediaWednesday, 8 February, 12
  • 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)Wednesday, 8 February, 12
  • 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 activityWednesday, 8 February, 12
  • 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 ✤ Remember: correlation doesn’t imply causation!Wednesday, 8 February, 12
  • 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 membershipsWednesday, 8 February, 12
  • 7. A bad indicator Source: Bloomberg BusinessWeekWednesday, 8 February, 12
  • 8. A worse indicator Source: Bloomberg BusinessWeekWednesday, 8 February, 12
  • 9. Totally off-the-wall indicator Source: Bloomberg BusinessWeekWednesday, 8 February, 12
  • 10. Groups 1 2 3 4 5 Naushin Varia Diana Ish Hui Yi Kat Carolyn Quiteria J Michelle Corey Haruka Catherine Stephanie Mimi Kai Ivy Phoebe Naomi AmyWednesday, 8 February, 12
  • 11. Please refer to the Economic Indicator Project page on the course blog for details on the requirements, deadlines and assessment criteriaWednesday, 8 February, 12