Introduction to Money
Consumers' attitudes toward the health of the economy are influenced by what they hear. And their confidence - or lack of it - affects how the economy behaves.
If consumers feel good about their current situation and about the future, they tend to spend more freely, which boosts economic growth. If they are worried about their financial status, e.g., job security, they tend to save more and spend less, thus slowing economic growth.
Some of the few things consumers are affected by are described here:
Weekly Earnings - Issued monthly by the Labor Department, tracks individual income. Individual spending is the largest single factor in economic growth.
The Employment Report - provides information on the unemployment rate, which industries were creating or losing jobs, and wage trends. In general, the higher the employment rate, the healthier the economy is and the more confident consumers are about spending.
Producer Prices - The Producer Price Index (PPI) measures the cost of raw materials. Consumer prices tend to rise a few months after production costs rise, as companies pass along their increased costs to consumers.
Consumer Credit - or the amount consumers are charging to pay for purchases, reflects consumer confidence or lack of it. Increasing charges suggest people feel good about buying.
Consumer Price Index (CPI) - The CPI looks at the economy from the consumers' perspective. It reports what it costs to pay for food, housing, and other basics. It is the basis for figuring adjustments to Social Security payments as well as determinig cost-of-living increases in wages and pensions.
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