Various economic indicators, when viewed together, can provide a fairly reasonable snapshot of how the U.S. economy is doing.
Is the U.S. economy growing? Is it contracting? Are we headed toward a downturn where business will slow, jobs will be lost and the markets will drop?
A quick glance every once in a while at some key economic indicators can give us an idea where we are and what may be coming.
We’re providing this Economic Indicators page as a reference for readers to get this quick idea of how the U.S. economy is fairing at any given time.
The FRED Widget – widget and stats courtesy of the Economic Research section of the Federal Reserve Bank of St. Louis – will update automatically, providing what we believe is a look at some of the most relevant economic data.
You can click each category for a more in-depth look. Historical charts of all the statistics are good for viewing trends from a long-range perspective.
Below we’ll give a brief overview of each indicator and what it can tell as it relates to the current economic climate.
Bookmark this page and check back occasionally to see how things are looking.
Real Gross Domestic Product
Real gross domestic product is the inflation-adjusted value of the goods and services produced by labor and property located in the United States.
Trends in GDP can tell us if the U.S. economy is getting stronger, weaker or staying about the same.
The number above shows the quarterly percentage rate of change of the U.S. GDP.
Since 2010, average annual GDP has come in at about 2.25% growth levels per year, with some years higher and some lower. 2015 and 2018 were the highest GDP growth years with 2.9% growth levels.
Roughly, a GDP rate of 2.0% is on par with current economic expectations. A rate below that, roughly in the 1.5% and lower range would be an economy that’s struggling to grow. While a rate of 3.0% and greater would indicate strong economic growth.
10-Year Treasury Rate
The 10-year treasury rate is a very rough measure of economic growth. When the 10-year rate is increasing, the general mood is positive (money is not being put into safer investments (bonds)). Conversely, when the 10-year rate is dropping, more money is being invested in the safety of bonds due to economic concerns.
Outside of its general economic indicators, the 10-year rate is loosely tied to interest rates for mortgages, car loans/leases and credit cards. Higher rates on the 10-year could mean higher rates on mortgages, credit cards, car loans as well as any other financial products where interest rates are involved.
It’s important to note the U.S. 10-year rate is currently close to its historical lows. A rate of 4-5% is considered a more “normal” range.
Consumer Sentiment
The University of Michigan Consumer Sentiment survey is just that, a survey of consumers at a given time to get a snapshot of how Americans are feeling about the economy, personal finance and spending money.
Rather than focusing on the number presented, looking at trends is a better way to use the Consumer Sentiment survey when considering how the economy is doing.
Unemployment Rate
The unemployment rate tells us the share of the labor force that is unemployed. A more detailed – and important to consider – definition is: individuals who are willing and available to work, and who have actively sought work within the past four weeks.
Those with temporary, part-time, or full-time jobs are considered employed, as are those who perform at least 15 hours of unpaid family work.
So, while the unemployment rate is an economic indicator, it’s not a complete view of the state of unemployment in the U.S.
The U.S. unemployment rate – 3.6% (pre-pandemic)- was the lowest it had been in 50 years.
Labor Force Participation Rate
The Labor Force Participation Rate provides a better view of the U.S. employment situation.
The Labor Force Participation Rate is the proportion of the working-age population that is either working or actively looking for work.
The participation rate, currently 63.3% (pre-pandemic), has declined and then stabilized around its current levels since the 2009 Great Recession.
And while 63.3% may sound like a good number, the U.S. hasn’t seen a participation rate this low since the late 1970s.
There are a few reasons for such a low participation rate, aging of our population out of the workforce, government fiscal policies and economic/technological trends.
Bottom line, a lower Labor Force Participation Rate equals a lower Gross Domestic Product (GDP) and less tax revenue for local, state and federal governments. Both of which are concerns for the bigger U.S. economic picture.
Venn Diagram image courtesy of Stuart Miles at freedigitalphotos.net