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Fundamentals ofBusiness & Financial JournalismWeek 7: Covering economic eventsJeffrey Timmermans
Economic goals of governments✤   Full employment    ✤   or at least as full as possible...✤   Steady annual growth in outp...
Measuring economic performance✤   Output of goods & services✤   Changes in prices for goods & services over time✤   Mood o...
Questions to ask about data✤   Who is publishing the data, and who compiled it?✤   What do the data cover, and what is lef...
More questions✤   Is the data published as an index, or an absolute amount?    ✤   If an absolute amount, what is the unit...
Adjustments✤   Seasonally adjusted    ✤   Data “smoothed” using long-term seasonal trends✤   Inflation adjusted    ✤   Real...
Economic indicator stories: basicstructure✤   Change✤   Cause✤   Expectations                   CCE CCF✤   Comment✤   Cont...
Advance prep for covering data✤   Always keep updated schedule of data announcements✤   Before each major announcement, fin...
Measuring economic performance✤   Output of goods & services✤   Changes in prices for goods & services over time✤   Mood o...
Major economic indicators✤   Gross Domestic Product✤   Consumer Price Index✤   Consumer Confidence Index✤   Unemployment ra...
Gross Domestic Product✤   Total value of goods & services produced within a country’s borders✤   Typically measured using ...
Problems with GDP✤   Doesn’t measure externalities (positive or negative)    ✤   Pollution, education✤   Doesn’t include a...
World News: Asia: Indonesian growth rate risesBy Farida Husna and I Made Sentana11 May 2010JAKARTA -- Indonesias economic ...
Japan grows but stays fragileBy Mure Dickie in Tokyo and Robin Kwong in Taipei21 May 2010                                 ...
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  1. 1. Fundamentals ofBusiness & Financial JournalismWeek 7: Covering economic eventsJeffrey Timmermans
  2. 2. Economic goals of governments✤ Full employment ✤ or at least as full as possible...✤ Steady annual growth in output ✤ without overheating✤ Stable prices (low but steady rise in prices over time)
  3. 3. Measuring economic performance✤ Output of goods & services✤ Changes in prices for goods & services over time✤ Mood of consumers✤ Employment✤ Total supply of money✤ Trade with other countries
  4. 4. Questions to ask about data✤ Who is publishing the data, and who compiled it?✤ What do the data cover, and what is left out?✤ How reliable are the data?✤ What is the time period for the data?✤ Will the data be revised later?✤ Are the data seasonally adjusted? Adjusted for inflation? Annualized?
  5. 5. More questions✤ Is the data published as an index, or an absolute amount? ✤ If an absolute amount, what is the unit of measurement?✤ What will you use for comparison? Year-earlier period? Previous month or quarter?✤ How should you describe the significance of the measure to your reader?
  6. 6. Adjustments✤ Seasonally adjusted ✤ Data “smoothed” using long-term seasonal trends✤ Inflation adjusted ✤ Real: effects of inflation are removed ✤ Nominal: no adjustment for inflation✤ Annualized: “what if” same trend continued for a whole year
  7. 7. Economic indicator stories: basicstructure✤ Change✤ Cause✤ Expectations CCE CCF✤ Comment✤ Context✤ Future
  8. 8. Advance prep for covering data✤ Always keep updated schedule of data announcements✤ Before each major announcement, find out the expectations ✤ Conduct a poll of economists or other analysts✤ Get your story template ready (plug in comparison data, expectations)✤ Make appointments to speak with economists/analysts right after announcement
  9. 9. Measuring economic performance✤ Output of goods & services✤ Changes in prices for goods & services over time✤ Mood of consumers✤ Employment✤ Total supply of money✤ Trade with other countries
  10. 10. Major economic indicators✤ Gross Domestic Product✤ Consumer Price Index✤ Consumer Confidence Index✤ Unemployment rate✤ Money Supply✤ Trade Balance
  11. 11. Gross Domestic Product✤ Total value of goods & services produced within a country’s borders✤ Typically measured using the expenditure method: adding up the country’s spending on final goods & services ✤ GDP = Consumption + Investment + Government Spending + (Exports - Imports)
  12. 12. Problems with GDP✤ Doesn’t measure externalities (positive or negative) ✤ Pollution, education✤ Doesn’t include a measure of overall quality of life, happiness nor well-being✤ Doesn’t account for the consumption of fixed assets (depreciation)✤ In cross-border comparisons, doesn’t account for purchasing power parity
  13. 13. World News: Asia: Indonesian growth rate risesBy Farida Husna and I Made Sentana11 May 2010JAKARTA -- Indonesias economic growth accelerated in the first quarter to its fastest Changepace since the third quarter of 2008, as households continued to spend amid benigninflation and companies invested more on rising confidence in the economy, thegovernment said Monday.The official statistics agency said Southeast Asias largest economy expanded 5.7% Causeyear-to-year in the quarter ended March, accelerating from 5.4% in the fourthquarter of 2009.Meanwhile, non-seasonally adjusted quarter-to-quarter economic growth was 1.9%,a reversal of the previous quarters 2.4% contraction.The data showed that the domestic economys recovery remains on track, even ifgrowth came in slightly slower than expected.The median forecast of 12 regional economist polled by Dow Jones Newswires was forgross domestic product to have expanded 5.78% in the first quarter from a yearearlier. ExpectationsMeanwhile, the median projection of 10 economists who provided quarter-to-quarterforecasts was for GDP to have risen 2.1% compared with the preceding period.Bank Indonesia isnt expected to start tightening monetary policy soon as inflationarypressures arent yet seen as a threat, analysts said. Last week, Bank Indonesia keptits benchmark overnight rate at 6.50%, where it has been since August.Household consumption, the pillar of the countrys economy, rose 3.9% year-to-year Contextin the first quarter; investment gained 7.9% and exports gained 19.6%, the statisticsagency data showed.A 8.8% decline in the government spending, however, weighed on growth."We are still of the opinion that the underlying sentiment has ticked up in Indonesia,and the momentum should be maintained going forward," said OCBC economist CommentGundy Cahyadi.The government has set a 5.8% growth target for this year, compared with 4.5%expansion last year.Analysts said accelerating economic growth, stable inflation, and a more temperatepolitical atmosphere -- after parliament in March concluded its probe into acontroversial bank bailout -- should foster a more conducive environment for Futureinvestment.
  14. 14. Japan grows but stays fragileBy Mure Dickie in Tokyo and Robin Kwong in Taipei21 May 2010 ChangeJapans economy grew a relatively robust 1.2 per cent in the first quarter but fullrecovery from the worst postwar slump depends on demand from foreign export Futuremarkets and a rebound in private consumption that may be faltering.Preliminary gross domestic product data released yesterday were equivalent to anannualised growth rate of 4.9 per cent - below economists forecasts but still anrefutation of fears last year that the economy might stall in early 2010 or suffer a Expectations"double dip".Naoto Kan, the finance minister, said the data reflected a "solid economic recovery"but made clear it was too soon to relax. "We need to watch very closely to see if thisis an autonomous recovery," he said.It can be dangerous to read too much into Japans preliminary estimate of GDP, astatistic often revised heavily.In the third quarter of last year, for example, the economy was initially thought tohave expanded 1.2 per cent but was later judged to have contracted and is now Contextrecorded as having expanded 0.1 per cent.However, yesterdays first-quarter estimate left no doubt of Japans continuingreliance on external demand for growth, with net exports of goods and servicesaccounting for 0.7 percentage points of the 1.2 per cent quarter-on-quarter Causeexpansion.The Japanese data offered some signs that Japans recovery was broadening, withgrowth in all categories of public demand, including residential investment, whichdeclined sharply throughout 2009."Rising exports and production have spilled over to domestic demand," wrote KiichiMurashima, economist at Citigroup Global Markets, in a research note. CommentBut the pace of quarter-on-quarter growth in private consumption softenedconsiderably, falling to 0.3 per cent - its weakest performance since the first threemonths of last year - suggesting a waning effect of government stimulus efforts.Much could now depend on the impact on consumption of a monthly Y13,000 ($145,€118, £102) child allowance introduced by the Democratic party-led government.Some analysts say many parents are likely to save rather than spend the windfall. Future

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