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A statistic that shows the health and direction of the economy. The economy can be roughly defined as "how things are going".

Some statistics that are regarded as key economic indicators are employment, housing starts and sales, manufacturing sales and inventories, trade balances, personal debt and savings levels, consumer confidence ...

Economics (like modern physics) seems to the uninitiated to be a form of voodoo at best and doubletalk at worst. This is because the key ideas, which are simple, are generally not communicated in a popular fashion.

You can check your own economic indicators, however, and get an idea of what economists do on a larger scale:

  • unemployment: how many people do you know who are out of work?

  • housing starts and sales: how many people do you know who are building or buying a home?

  • consumer confidence: how long do you hesitate before buying a luxury item, like a bigger TV?

Economists look at the indicators and make some sort of diagnosis, often using words like recession, inflation, depression, growth. These words do have technical definitions, but for your own personal use you can take them this way:

Recession
You have money, but it seems to disappear.

Inflation
You have a lot of money, but everything costs a lot of money.

Depression
Prices are incredibly low, but no one has any money.

Growth
You've got money, you're spending it, and there is no problem.

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