ECONOMIC INDICATORS
Scott Wallace, Ph.D. Director and Editor, CBEI; Professor of Economics School of Business and Economics
As Kevin Bahr described in his report, our current economy is truly one we haven’t experienced before. The pandemic induced dramatic and rapid shifts in behavior which have had jarring effects on economic conditions. It will take time for the economy to adjust and heal from these changes. The highly contagious and severe Delta variant impeded much of the progress that the economy was making earlier this year. The emergence of new and deadly variants has added a great deal of uncertainty over future economic progress. It is important to recognize that economic indicators are snapshots in time and have a short shelf life given the recent acceleration of economic change.
National Economic Statistics Table 1 Key Economic Indicators 2021 Third Quarter
% ∆ Yr. Ago
Nominal Gross Domestic Product (in Billions) Real Gross Domestic Product (in Billions) Industrial Production (2017 = 100) Consumer Price Index (1982 - 84 = 100)
$23,173.50 $19,465.20
9.63
+ 4.87
100
+4.6 + 5.4
274.31
Description: • Nominal Gross Domestic Product (in Billions): The dollar value of all final goods and services produced in a year, using current prices. • Real Gross Domestic Product (in Billions): The dollar value of all final goods and services produced in a year, using prices from a base year (2012) to adjust for inflation. • Industrial Production Index: Measures real output (as a percentage of actual output in 2012) produced in the United States in manufacturing, mining, and electric & gas utilities. • Consumer Price Index: Measures the average monthly change in the price of a representative basket of goods and services bought by consumers Analysis: • The third quarter increase in Real GDP of 4.87% from 2020 Q3 reflected a slowing of economic growth compared to the second quarter 12.2% increase from 2020 Q2. Much of the decline in growth has been attributed to the impact of the Delta variant, especially in southern states during the third quarter. (see Table 2 analysis for more discussion) • Industrial Production is often a good indicator of economic conditions because it adjusts fairly quickly to changes in the economy. Manufacturing by its very nature is very responsive to changes in market conditions. Here we see that the Industrial Production Index has increased by 4.6% over the last year though it recently has declined 1.3% since August. The good news is that there has been a 1.6% increase between September and October of this year. • Inflation has increased with CPI rising by 5.4% since 2020 Q3. On a monthly basis, October numbers indicate that inflation is accelerating with 6.2% increase over a year ago. As Kevin Bahr discusses in his report, increases in aggregate demand combined with supply chain constraints are largely responsible for this acceleration. The Federal Reserve expects inflation rates to be elevated well into 2022.
Central Wisconsin Report - Fall 2021
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