[AUD] Business cycles, Economic indicators

Business cycles

From Becker Aud image

Expansionary Phase

- rising profits, strong growth, increase demand, rising price

- lower unemployment

 

Peak

- high point of economic activity

- input shortage lead to higher costs and higer price level

 

Contractionary Phase

- higher unemployment

 

Trough

- profits at lowest elvel

- firms have excess capacity, reduce cost and their workforces

 

Recovery Phase

- recovering economc activity

- rising demad, profit stabilization

- increase in employment

 

* Recession

  : increase allowance for doubful accounts

 

Economic indicators

 

Leading indicator

Before economy activity starts, prediction

- Average weekly undemployment insurance intial claims

- Budiling permits for new private residences

- New manufacturer orders for consumer goods and materials

- Producer Price Index

 

Coincident indicator

- Manufacturing and trade sales

- industrial production(GDP)

 

Lagging indicator

result of economic activity

- Average prime rate charged by banks

- Average duration of unemployment

- Consumer price index(CPI) for service