Economic Indicators

Economic Indicators

Housing Starts

The economic indicator of housing starts is the gross number of new residential building construction projects that have begun in a certain month. The Federal Government gathers information by two surveys: the Building Permits Survey and the Survey of Construction.

The Building Permits survey estimates the number of building permits issued for new housing permits on a monthly basis. The data is gathered in a by mail survey of local permit offices. Although this is a monthly report, some smaller areas will only report yearly; the numbers received on a monthly basis are adjusted to compensate for these exceptions.

The Survey of Construction is an estimate of housing starts and completions. Census representatives will sample individual permits in a select number of permit offices. After receiving this information, the Census representatives then interview the builders who had received permits to obtain start and completion dates for their projects.

The number for the new starts are compiled and adjusted by the information gathered from the Survey of Construction, the information is disbursed to the public on a monthly basis. The number of housing starts provides indication of how the strong the economy is, assuming when the economy is strong (more discretionary income, better interest rates, higher perceived value), consumers are more likely to purchase a home.

The S&P 500

The Standard & Poor’s, or S&P as they are more commonly called, 500 index is a sample of five hundred domestic large capitalized (companies with a market capitalization value of ten billion dollars or more) domestic company common stocks and their performance on the stock market. The stocks that constitute the index are selected by Standard & Poor’s for their market size, liquidity (ability to be easily traded) and other factors. The weight each stock has on the index is in direct proportion to its’ market value.

The S&P 500 is widely considered to be the general benchmark for the domestic stock market. Most large cap mutual funds are compared to the S&P 500 as a ruler for how well or poorly the funds are performing against the market.

This index is an indicator of the economy by showing the confidence