Glossary: US Economic Indicator Terms
This glossary provides concise definitions of essential terms for interpreting US economic indicators and data releases.
A
Annualized rate: A method of expressing monthly or quarterly data as if the rate continued for a full year, calculated by compounding the periodic change.
Average hourly earnings: The mean hourly wage for private-sector employees, reported in the monthly employment report and used as a wage inflation indicator.
B
Benchmark revision: An annual or periodic recalibration of economic data using more complete source information, often significantly revising prior readings.
Birth-death model: A statistical adjustment in payroll data that estimates net job creation from new business formation minus closures.
Building permits: Government approvals for new construction projects, serving as a leading indicator for housing starts.
C
Capacity utilization: The percentage of potential economic output currently being used, calculated by dividing actual output by maximum sustainable output.
Coincident indicator: An economic measure that moves simultaneously with overall economic activity, such as industrial production or employment.
Consumer Price Index (CPI): A measure of average price changes for a basket of consumer goods and services, reported monthly by the Bureau of Labor Statistics.
Continuing claims: The total number of people receiving unemployment insurance benefits, reported with a one-week lag after initial claims.
Control group (retail sales): Retail sales excluding autos, gas stations, building materials, and food services—used in GDP calculations.
Core inflation: Inflation measures excluding volatile food and energy prices, used to assess underlying price trends.
D
Diffusion index: A measure showing the breadth of expansion or contraction, calculated as the percentage of respondents reporting improvement minus those reporting deterioration.
Durable goods: Products designed to last three or more years, such as appliances, vehicles, and machinery.
E
Employment-to-population ratio: The percentage of working-age civilians who are employed, calculated without reference to labor force participation.
F
Financial conditions index: A composite measure aggregating credit spreads, equity prices, volatility, and interest rates to assess overall financing availability.
G
GDP (Gross Domestic Product): The total value of goods and services produced in the economy, reported quarterly by the Bureau of Economic Analysis.
H
Housing starts: The number of new residential construction projects where work has begun, reported monthly at an annualized rate.
I
Initial claims: New weekly filings for unemployment insurance benefits, serving as a real-time indicator of layoff activity.
Industrial production: An index measuring output in the manufacturing, mining, and utilities sectors, published by the Federal Reserve.
ISM (Institute for Supply Management): The organization that publishes monthly manufacturing and services purchasing managers' indexes.
L
Labor force participation rate: The percentage of working-age population either employed or actively seeking employment.
Lagging indicator: An economic measure that changes after the overall economy has already shifted, such as the unemployment rate or corporate profits.
Leading indicator: An economic measure that changes before the overall economy, such as building permits or new orders.
M
Month-over-month: The percentage change from the prior month, used to assess recent trends but subject to volatility.
N
Nonfarm payrolls: The count of jobs in the US economy excluding farm workers, reported monthly in the employment situation report.
NFCI (National Financial Conditions Index): The Chicago Fed's weekly index measuring the tightness or looseness of financial conditions.
P
PCE (Personal Consumption Expenditures): A measure of consumer spending and prices published by the Bureau of Economic Analysis, with the core PCE price index serving as the Fed's preferred inflation measure.
PMI (Purchasing Managers' Index): A survey-based indicator of business conditions where readings above 50 indicate expansion and below 50 indicate contraction.
Prices paid: A subindex in PMI surveys measuring input cost changes experienced by businesses.
R
Revision: An update to previously reported economic data as more complete information becomes available.
S
SAAR (Seasonally Adjusted Annual Rate): Data adjusted for seasonal patterns and expressed as an annualized figure for comparability.
Seasonal adjustment: A statistical process removing predictable calendar-related patterns from economic data.
U
U-3 unemployment rate: The official unemployment rate measuring the percentage of the labor force that is jobless and actively seeking work.
U-6 unemployment rate: A broader measure including unemployed, underemployed (part-time for economic reasons), and marginally attached workers.
Y
Year-over-year: The percentage change from the same period one year earlier, used to assess trends while controlling for seasonal effects.
Yield curve: The relationship between interest rates and maturity lengths for Treasury securities, with inversions historically preceding recessions.
This glossary is updated periodically. For detailed explanations of how these indicators work in practice, see the related articles in this Economic Indicators series.