Economic Indicators explained

• Economic growth


  The increase in value of the goods and services produced by an economy
• Measure of economic growth

  Percentage rate of increase in real GDP
• Stagnation


  A prolonged period of slow economic growth
• Stagflation


  An economic situation in which inflation and economic stagnation occur simultaneously and remain unchecked for a period of time
• Recession


  A contraction phase of the business cycle. A significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales
• Depression


  An economic situation characterized by rising unemployment, an excess of supply over demand, deflation, reduced purchasing power, contraction of general business activity and public fear
• Inflation


  The general rise in the prices of goods and services
• Moderate inflation


  Normally associated with periods of expansion and high employment
• Hyperinflation


  When prices rise 100% or more a year, causes people to lose confidence in the currency
• Demand-Pull Inflation


  Price increases as a result of supply not meeting demand
• Cost-Push Inflation


  A sustained rise in prices caused by businesses passing on increases in costs, especially labour costs, to purchasers
• Core inflation


  A measure of inflation which excludes certain items that face volatile price movements e.g. food products and energy
• Headline inflation


  A measure of the total inflation within an economy and is affected by areas of the market which may experience sudden inflationary spikes such as food or energy
• HICP


  Harmonised Index of Consumer Prices - an inflation measure required by the EU
• CPI


  Consumer Price Index (UK) - a measure of the average price of consumer goods and services purchased by households
• The Bank of England is required to set interest rates so as to keep inflation, as measured by the CPI, within a target range
• RPI


  Retail Price Index - calculates the cost of buying a standard basket of goods and expresses this as a percentage of the base year index
• Deflation


  A persistent price decline of goods and services. Deflation usually occurs during a recession and is characterized by supply exceeding demand. It generally affects production and employment negatively
• Disinflation


  A result of a slow down in the rate that prices increase
• GNP


  Gross National Product - the total value of goods and services produced by the economy in a given period, including income from abroad
• Real GNP


  Measures economic production that is adjusted for inflation
• GDP


  Gross Domestic Product - the total value of a nation's output, income, or expenditure produced within a nation's physical borders
• GNI


  Gross National Income comprises the total value produced within a country (i.e. its GDP), together with its income received from other countries, minus similar payments made to other countries
• HDI


  Human Development Index. Created by the United Nations Development Program (UNDP), it is a summary composite index that measures a country's average achievements in three basic aspects of human development: longevity, knowledge, and a decent standard of living
• Employment rate


  The percentage of the labour force, i.e. the working age population (ages 15 to retirement age) who are currently employed
• Unemployment rate


  The percentage of the labour force that is unemployed and actively seeking a job
• Balance of payments


  An accounting statement of the money value of international transactions between one nation and the rest of the world over a specific time period
• Current account


  The portion of a nation's balance of payments statement that records the total exports and imports of goods, services
• Capital account


  The portion of a nation's balance of payments statement that records the purchase and sale of capital assets
• Balance of trade


  That part of a nation's balance of payments dealing with imports and exports, that is trade in goods (visible trade), over a given period
• Trade surplus


  If exports of goods exceed imports, the trade balance is said to be "favourable"
• Trade deficit


  If imports exceed exports, the trade balance if said to be "unfavourable"
• Budget deficit


  The situation that exists when government expenditures exceed tax revenues
• Budget surplus


  The situation that exists when government tax receipts exceed government expenditures
• Public debt


  The accumulated borrowings of the government; also known as the national debt
• Disposable income


  The amount of income left after such deductions as income tax, pension contributions and national insurance