Consumer indicators.
- Consumer indicators are economical statistics and allow us to interpret the future performance and analyze economic performance.
- Economic indicators include such indices and economic reports such as: unemployment, Consumer Price Index, GDP, Money Supply, Stock Market Prices etc.
Misleading economic statistics
- GDP measures national output. Using official statistics GDP measures National output. However there are some variances e.g. You spend £1000 on vegetables annually, but then you decide to grow everything from seed in your garden. Therefore your expenditure falls by £1000, so then National output appears to fall too, even-though you are still consuming the same amount of vegetables.
- GDP per capita. e.g. US GDP per capita is $20000, when Tanzania GDP per capita is only $500. Does this mean that living standards are severely worse in Tanzania? It does not, due to currency value dollar will ' go a lot further' in Tanzania rather than in US, so for example to rent an apartment in LA would cost around $500 and in Tanzania, you could rent a similar apartment for only $20. In fact Tanzania's economy is underestimated, because a lot of people grow and consume their own food, without claiming an income.
Some people may interpret this chart is showing a fall in GDP, even-thought it seems as it is, it is actually increasing, but at a slower rate.
This might seem confusing for some as the vertical axes show GDP growth, but we actually want to know about GDP, and this is where rates of change and absolute change can be confused.
How can economic indicators be used to mislead people?
A good example would be the GDP of Korea. It's GDP ranking has fallen down to number 15 in the world and GDP per capita fell below $17000. Some may derive a conclusion from the given data that Korean economy is simply slipping, but it is not the case here. Both figures are quite misleading and do not reveal the entire truth about Korean economy.
Everytime Korea is talking about being one of the relatively largest economies based on the GDP, it is trying to give an impression that it is one of the best performing economies in the world, but again this is not the case here.
Nation's GDP is used for comparative purposes to determine whether nation's economy has grown or contracted. The real indicator of economy's performance is GDP per capita.
Korea's per capita GDP is much worse than it's GDP. If GDP is hovering between 13-15th places in the world, per capita GDP is around 48-50th. This ranking is not only unflattering, it also 'underscores' Korea's claiming of being an economically advance country. There are at least 33 countries with a much higher people's income and a lower GDP than Korea.
GDP and GDP per capita were used here to mislead the general public about Korean economic strength.
Most Korean's economy is developing basing their information on GDP, which in fact does not indicate economy's performance. It is easy to mislead people who do not have a deep understanding in economics.
