Best economic indicators for the economic health of a country?

In summary, the conversation discusses different metrics for evaluating a country's economic performance over time, including GDP, GNP, the Human Development Index, and the Genuine Progress Indicator. There is also a suggestion to compare GDP to GNP trends and an index that combines inequality with GDP to get a clearer view of a country's economic health. The conversation also touches on the importance of considering world events when comparing economic indicators over time.
  • #1
KingNothing
882
4
Hi all. Let me start by saying that I am not an economist, I just have a question about economics and I'm hoping some of you bright minds can help me out.

I'm trying to understand how to evaluate the economic performance of a country over time. What metrics should I look at, and how can I find historical data for them?
 
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  • #2
Well GDP or Gross Domestic Product is a good start. GDP = private consumption + gross investment + government spending + (exports − imports).
 
  • #3
There's lots of discussion over whether GDP really measures what you care about, since it is just a measure of economic activity and doesn't care about quality of life or the type of economic activity. There are several alternative measures that have been proposed that try to look at these things as well. Try looking at these:

http://en.wikipedia.org/wiki/GDP
http://en.wikipedia.org/wiki/Human_Development_Index
http://en.wikipedia.org/wiki/Genuine_progress_indicator
 
  • #4
Oh, well in MY opinion I think GDP is complete nonsense. But I didn't want to get into all that! Not in this thread. The mainstream veiw is that GDP is a good indicator.
 
  • #5
I'm aware of GDP being used, but it doesn't contain all the information I want.

For example, I'd like to measure the level of disparity / distribution of wealth. Brazil, for example, has the 8th largest GDP, but has huge disparity and many people are living in shanty-towns.
 
  • #6
KingNothing said:
I'm aware of GDP being used, but it doesn't contain all the information I want.

For example, I'd like to measure the level of disparity / distribution of wealth. Brazil, for example, has the 8th largest GDP, but has huge disparity and many people are living in shanty-towns.

I'd like to suggest (for analysis of US) that you compare GDP to GNP trends over time.
 
  • #7
Is there an index which shows% of family income needed for food, housing, healthcare etc?
Seems that this would do a good job of comparing lifestyles across countries and history.
 
  • #8
KingNothing said:
I'm aware of GDP being used, but it doesn't contain all the information I want.

For example, I'd like to measure the level of disparity / distribution of wealth. Brazil, for example, has the 8th largest GDP, but has huge disparity and many people are living in shanty-towns.

Ther's an index that does this, called the Gini coefficient. As you said, Brazil ranks at the very top (most unequal). However, the US is catching up fast!

http://en.wikipedia.org/wiki/Gini_coefficient
 
  • #9
The unemployment rate is another one, as is stock prices, money supply (M2), number of new building permits issued
 
  • #10
The savings rate is also important.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aexjnfkHISt0 [Broken]
 
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  • #11
BilPrestonEsq said:
Oh, well in MY opinion I think GDP is complete nonsense. But I didn't want to get into all that! Not in this thread. The mainstream veiw is that GDP is a good indicator.
If you think "GDP is complete nonsense," why would you promote the view ('mainstream' or otherwise) that it's a good indicator? The OP asked what the best way to measure economic health is, so why don't you just answer it according to your own best judgment?
 
  • #12
brainstorm said:
If you think "GDP is complete nonsense," why would you promote the view ('mainstream' or otherwise) that it's a good indicator? The OP asked what the best way to measure economic health is, so why don't you just answer it according to your own best judgment?

The GDP can be useful - if you track it against other indicators, trends, and events.
 
  • #13
phyzguy said:
Ther's an index that does this, called the Gini coefficient. As you said, Brazil ranks at the very top (most unequal). However, the US is catching up fast!

http://en.wikipedia.org/wiki/Gini_coefficient
There needs to be an index that combines inequality with gdp in order to get a clearer view of where people stand. Just using gini, you can end up with the ridiculous conclusion that a Brazilian living in a tin shack and an American with cable tv and air conditioning are equally poor.
 
  • #14
russ_watters said:
There needs to be an index that combines inequality with gdp in order to get a clearer view of where people stand. Just using gini, you can end up with the ridiculous conclusion that a Brazilian living in a tin shack and an American with cable tv and air conditioning are equally poor.

You need to go further than that, because you could also come to the conclusion that the person watching TV all day and gaining weight in the air conditioning, who is losing their health and feeling of self-worth is more prosperous than the person living in a tin shack who has gotten their basic needs taken care of by means of a rigorous daily routine of water-fetching, subsistence agriculture, and other work to improve their dwelling and develop one step further in improving their living conditions. Of course, the same person in the same conditions can be miserable when the shack is falling apart, no suitable scrap materials can be found to replace it, someone bullied them away from their water-source, and/or their subsistence agriculture is having problems. Then you could say that the poor person with a house, TV, and air-conditioning is richer, especially when they are getting in shape, getting along with people, figuring out new strategies for improving their living conditions, etc.
 
  • #15
When compared to other indicators over time, GDP tends to be more meaningful. This comparison to GNP demonstrates some of the differences between GDP and GNP.

http://www.diffen.com/difference/GDP_vs_GNP

IMO - it's important to highlight world events along the comparison timeline.
 

What are economic indicators?

Economic indicators are data points that provide insight into the current and future health of a country's economy. These indicators can include measures of inflation, employment, production, and trade.

What are the best economic indicators for measuring the health of a country's economy?

The best economic indicators vary depending on the specific goals and priorities of a country. However, some commonly used indicators include gross domestic product (GDP), unemployment rate, consumer price index (CPI), trade balance, and stock market performance.

How do economic indicators affect the overall economy?

Economic indicators can have a significant impact on the overall economy, as they provide information about key aspects such as consumer spending, business investment, and government policies. These indicators can also influence financial markets, consumer confidence, and the decisions of policymakers.

How often are economic indicators released?

Economic indicators are typically released on a regular schedule, ranging from monthly to quarterly to annually. The specific release dates for each indicator can vary, but they are often published by government agencies or private organizations.

What are some limitations of economic indicators?

While economic indicators can provide valuable insights into the health of a country's economy, they also have some limitations. These may include time lags in data collection and reporting, potential inaccuracies or biases in the data, and the fact that not all aspects of the economy can be captured by a single indicator.

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