If you follow current events, read the newspaper, or watch the nightly news (and if you don’t I will give them to you here) you hear all sorts of numbers regarding the economy from unemployment, inflation, GDP, etc. What do they all mean for the economy going forward?

First lets look at some of the numbers:

Inflation: 3.3% through November 2011 (using the CPI)
Unemployment: 8.5% through December 2011
GDP Growth: 1.8% in Quarter 3

Unemployment

We have seen unemployment fall from 9.1% in July to 8.5% in December. Though it is encouraging to see the unemployment rate fall slightly, 8.5% is still a very high number. It is difficult to say if this drop in the unemployment rate is due to seasonal hiring for the holiday season or if people continue to leave the labor force. The following graph shows labor force participation and you can see the decline in the last 2 years…

The key will be to see what the unemployment rate does in the first 2 months of 2012, if we see the decrease then that is a very positive sign for the economy and in turn could increase consumer spending and GDP, however if the unemployment rate rise then we know it was just seasonal workers. The big number to pay attention to is the week to week first time unemployment filings. This number is usually all over the place right now, but following the trends in it over time can give you an idea as to what job conditions are out there. This is a number you hear about quite often in the media and is very important in attempts to try to forecast future unemployment rates.

Following the statistics can help you better understand the economy, and though it is impossible to predict fully, these little things can help you better understand the day-to-day comings and goings in the economy.

Read the rest of the article from tumblr econ4dummies, here.