How we can really tell how the economy is doing

The economy is always in the news. One political group will say the economy is on its way up, the opposing one will say we are in deep. It is always a point of contention. But how do we really know who is telling us the real scoop? 

One agency that keeps track of the economy (besides the politicians) is The United States Census Bureau’s Economic Census. This census gives an in depth picture of the Nation’s economy every five years, at the local level as well as the national level.  The last economic census was in 2012. this census has information on such topics as age, income; geography, race and ethnicity, industry and occupation. I found almost 2,000 tables with economic information on the website. Information is gathered by sending out forms to over four million companies with at least one employee, while small businesses are represented by sampling. In 2007 there were 500 different versions of the form as they are individualized to each particular business. Non-profit organizations are also included in the census. Businesses or industries are described as “establishments” and are a business or industrial unit who either produces or distributes goods or performs a service.

One of the most important tables in the census is the Economy-Wide Key Statistics file, which shows statistics on the number of establishments, employment, payroll, and sales for each available industry as well as geographic area that is represented in the census. This census also gathers statistics for the entire nation, including individual states, large city areas and provides a clear picture of the business behavior in a wide variety of industries and communities all over the U.S. The information in these tables is used to help define the economic indicators such as the gross domestic product as well as monthly retail sales. All of these depend on the economic census for accuracy.  Small and large businesses depend on this information to help guide them in business strategies.  

So how is all this information calculated and used? It all depends on who is looking at it. Industrial Production is the output of American industry and workers.  The Federal Reserve Board of Governors measures this production by calculating the manufacturing output in consumer goods, equipment, supplies (especially construction), materials, manufacturing, mining, and utility industries. Production is calculated in each sector monthly, and the percentage change in output is reported as industrial production, durable goods, high ticket items such as cars, computers, appliances, and furniture, as well as construction supplies, tend to be more sensitive to economic changes than are other manufacturing products. In general, though, industrial production tends to increase during economic growth and fall during periods of economic decline.

There is obviously much, much info there folks. The biggest thing is how that info is calculated, interpreted and used. Maybe this is why there seems to be a certain amount of fluctuation and difference in opinion as to how the economy is doing, but at least we know where they get their figures from. Information for this post is from The American Fact Finder at the United States CensusBureau.