With today’s advancements in technology and the speed at which we can gather and utilize data along with our increased understanding of how our economy works, we can predict the economic health of the United States fairly accurately. Some of the methods used to track the health of the economy are tracking the sales of durable goods, non–durable goods, and service levels within the united states economy. The sales of these three types of items can tell us how individuals and businesses feel about the economy and so they act as leading indicators.
Based on the data we receive we are more than able to understand the underlying health of the economy and how the public is expecting the economy will be. We are then able to make policies to shift the economy into a more desirable direction if it is not moving in the way or speed that we feel it should.
To begin, we will discuss durable goods.
The environmental protection agency (E.P.A) of the United States in an article entitled “Durable Goods: Product-Specific Data” states that “EPA defines durable goods as products with a lifetime of three years or more, although there are some exceptions to this. In this EPA analysis, the durable goods category includes large and small appliances, furniture and furnishings, carpets and rugs, rubber tires, lead-acid automotive batteries, consumer electronics, and other miscellaneous durable goods such as luggage, sporting goods, and household goods” (Durable). This information gives us some idea of what durable goods are and how they are used in the economy.
Durable goods are mostly goods used in housing such as washers, dryers, refrigerators, and or other appliances. Durable goods can also be items used by businesses to make other items. Using this information we can assume that when large amounts of durable goods are being purchased people are feeling good about the economy and are building houses while businesses are trying to increase output and production (Wohlner).
In tracking the sales of durable goods over the last ten years in millions of dollars we can see a gradual increase. From December 2009 to January 2010 there was a sharp increase in the demand for durable goods going from 160,461 (millions of dollars) to 182,717 (millions of dollars). This increase in the purchasimmediatee of durable goods continued until December of 2011 when it began to slow down to 226,612 (millions of dollars) before declining to 217,304 (millions of dollars) in May of 2012. Sales began to increase in July of 2012 reaching a peak at 225,570 (millions of dollars) before sharply lowering over the next month to 201,041 reaching an extreme low in August of 2012. The gradual increase contAugustinued until June of 2014 when it had a sharp increase in slope going from 236,601 (millions of dollars) to an all-time high of 292,098 (millions of dollars) in one month before subsequently crashing back down to 236,723 (millions of dollars) in august of 2014 and declining steadily until reaching 208,697 (millions of dollars) in June of 2016 where it began to steadily increase again to the current month and year of November of 2018. (U.S. Bureau of the Census, Manufacturers’…)
Secondly, we move on to nondurable goods. The environmental protection agency (E.P.A) of the United States in an article entitled “Nondurable Goods: Product-Specific Data” states that “The Department of Commerce defines nondurable goods as products with a lifetime of fewer than three years” (Nondurable). The article also goes on to state “Products made of paper and paperboard comprise the largest portion of nondurable goods. Other nondurable products include paper and plastic plates, cups and other disposable food service products, disposable diapers, clothing and footwear, linens, and other miscellaneous products” (Nondurable). Looking at the makeup and nature of these items we can make a reasonable assumption that these items are meant to be consumed or used over a much shorter period than durable goods. This category also includes everyday items from food and alcohol to tobacco products which further shows that the timeframe which these items are intended to be used is immediately up to the three-year mark which is what further divides these products from durable goods.
In tracking the sale of nondurable goods over ten years beginning in August 2009 and ending in august 2018 we begin to see a clear pattern. Looking at the overall graph, we can see that yearly sales begin a gradual to a sharp increase in slope between February and April before stagnating in May and June before gradually to sharply decreasing in slope up until it reaches a consistent low in January. Beginning in January of 2010 where the sales reached a low of 14,318 (millions of dollars) rising in the subsequent months of March and April where it reached a peak of 21,843 (millions of dollars) before steadily declining in slope in May, June, July, August, and December before reaching its first higher low in January of 2011 at 15,589 (millions of dollars) as compared to 14,318 (millions of dollars) in the January of the year prior. This higher low led to a gradual increase in price yearly in January which is continuing at the current time. Sales of nondurable goods reached a peak in May of 2013 at 28,457 which was only beaten recently by a small margin in May of 2018 when sales reached 28,539 (millions of dollars). (U.S. Bureau of the Census, Merchant Wholesalers…)
Lastly, we move on to service levels. A service level in the united states can be any service offered to the public or businesses such as healthcare, internet, insurance, etc. by measuring these things we can see how well the economy is growing and or improving in that area and this may give us a better insight into the economy as a whole. As a whole, the united states economy is extremely focused on service. A Forbes article entitled “Today’s Customers Demand Customer Service On Their Terms” states “The great brands of the world have boasted, and deservedly so, about their excellent service. And, they have the awards to prove it. They have educated our customers about what great customer service looks like, and now customers have come to expect it. These brands have raised the bar for all companies involved. No longer does a customer compare you only to your direct competitor. You may be in the manufacturing business, but your customer service is now being compared to your customer’s recent experience at a hotel or a restaurant, or maybe an employee at a local retail store who was so helpful (Hyken).
The service level we will focus on will be education and health which we will do by looking at job openings. Job openings give us a good idea of how an industry is doing and whether it is expanding or contracting simply by looking at the number of positions open yearly. This is under the assumption that a business or industry hiring more employees implies that the industry itself is doing well and expanding which may or may not be the case in all situations and this is only an indicator that it may or may not be moving in a certain direction. We will be reviewing data over 10 years beginning in September 2008 and ending in September 2018. Like most other industries, there was a steady decline as of September 2008 continuing until reaching a bottom in August 2010 at 475 (thousand). Each year since that time it has been on a constant slope upwards with no noticeable peaks or bottoms. The number of job openings from august of 2010 has risen to 1,300 (thousand) meaning it has nearly tripled. This data seems to indicate that the healthcare industry has grown significantly and therefore we can assume that the economy as a whole has grown. (U.S. Bureau of Labor Statistics, Job Openings…)
While on their own these indicators may not be viable in measuring economic health or predicting the future of our economy, they can offer us a much clearer image. We are now at a point in technology where data can be gathered and utilized faster than at any other point in history making data that may not have been relative years ago to be able to be made relevant now. So for now, while these indicators may only be able to give us slight insight they may very well, later on, be able to predict the future of the economy.