| "A collapse in U.S. stock prices certainly would cause | | | | experts believe that the gross domestic product |
| a lot of white knuckles on Wall Street. But what | | | | should be used to measure the productivity of a |
| effect would it have on the broader U.S. economy? | | | | nation and not the state of its economy. Information |
| If Wall Street crashes, does Main Street follow? Not | | | | about the gross domestic product is released four |
| necessarily." -Ben Bernanke | | | | times a year. |
| Financial advisors and skilled investors will often look | | | | Unemployment - Unemployment is another important |
| at economic indicators to predict whether the stock | | | | economic indicator. The information about |
| market will be up or down. Sometimes these | | | | unemployment is release each month. The term |
| economic indicators are right and sometimes they are | | | | refers to the amount of people that are actively |
| wrong. Regardless, it is important to understand that | | | | looking for work. Most financial experts believe that |
| the economy is not the stock market and vice versa. | | | | unemployment rates can not predict the motion of |
| While they may be different things they do effect | | | | the stock market but can be used to confirm a trend |
| each other. Smart investors know what these | | | | in progress. In general, when the stock market is up |
| economic indicators are and monitor them closely. | | | | unemployment will be down. When the stock market |
| The two most important economic indicators are the | | | | is down unemployment will be up. |
| gross domestic product and unemployment. | | | | While both of these economic indicators seem like |
| Gross Domestic Product - This term refers to the | | | | common sense, many new investors fail to use them |
| value of all goods and services produced by a | | | | as tools to help them invest. Many online financial |
| country in a year. It takes into account all production, | | | | websites and online brokerage firms offer free data |
| both private and public, investments, exports, and | | | | and charts on a number of economic indicators. It's |
| imports. The following is the formula used to | | | | important to remember that the stock market and |
| determine the gross domestic product : GDP = C + G | | | | the economy are different things and are influenced |
| + I + NX. It is not as complicated at it seems. The | | | | in different ways. Simply because the economy is up |
| "c" is the consumer spending, the "g" is the | | | | does not mean it is a great time to invest. The |
| government spending, the "i" is country's spending | | | | opposite is also true. Just because the economy is |
| capital, and "nx" is exports minus imports. The gross | | | | low does not mean it is a bad time to invest. There |
| domestic product is a common tool to monitor the | | | | are relationships between the economic indicators and |
| economy in America and standard of living increases | | | | the stock market however the assumed relationship |
| or raises are usually determined by it. Many financial | | | | is not always the correct one. |