7.2.2. Important Coincident Indicators
Gross domestic product (GDP). The GDP measures all the finished goods and services produced within the geographic boundaries of a country. The Bureau of Labor Analysis has divided the GDP into four major components:
• Personal consumption expenditures is the largest component, at around 70%. It consists of all the goods and services produced within the U.S.
• Business investment includes the purchases used to produce goods; for example, computers, manufacturing equipment, and real estate.
• Government spending makes up about 20% of GDP.
• Exports add to the GDP, while imports subtract from GDP.
GDP is the statistic that is most commonly used for identifying business cycles and for determining whether the country is in a recession or depression.
Non-farm payroll. This statistic is found in a monthly report released by the Bureau of Labor Statistics called The Employment Situation. The report is made up of two surveys.
The first survey tallies the non-farm payroll, hours worked, and hourly wages of businesses across the country. When payrolls and wages increase, this is usually a good indication that people are spending more in the economy. The payroll data is considered a coincident indicator, but can influence the markets if the data are different from expectations.
The second survey examines the number of people out of work by househol