SIE: 7.3.2.4.3. Important Lagging Indicators

 7.3.2.4.3. Important Lagging Indicators

Consumer Price Index (CPI). The CPI is a monthly report released by the Bureau of Labor and Statistics. It measures changes in the price of a “basket of goods” that a typical consumer might purchase, including food and energy products. The CPI is considered the best measure of inflation. The release of the CPI has a large effect on both the equity and debt markets, because it gives a strong indication of whether the Federal Reserve will alter interest rates.

Other lagging indicators:

• • Business spending
• • Unemployment report
• • Prime rate charged by banks
• • Bank loans outstanding
• • Employment Cost Index (ECI)—monthly changes in employee wages and benefits

The exam may ask a question such as, “Which of the following is the best sign that the econ