Monday, August 15, 2011

What Indicators Have the Biggest Impact on the Economy (Part I)?

I built an economic model using the following leading indicators from 1982 to 2010 (some parameters data only goes back to 1982): Unemployment, Inflation, Debt, Trade Deficit, Consumer Price Index, the Gross Domestic Product (GDP), Consumer Spending, Auto Sales, Tax Revenue, Housing Prices, and Housing Start Ups. The data is readily available from the Bureau of Economic Analysis (BEA). The model is below (the parameters are in percent or thousands or millions of dollars).

Year Unemployment Inflation GDP Debt Budget Home Price Housing Starts CPI Trade Deficit Tax Revenue Consumer Spending Auto Sales
1982 9.7 6.16 3253 1142 746 83900 1,062.2 42.29 24156 617766 2075500 79.6
1983 9.6 3.22 3534 1377 808 89800 1,703.0 43.29 57767 600562 2288600 100.8
1984 7.5 4.3 3931 1572 852 97600 1,749.5 45.25 109072 666438 2501100 124.4
1985 7.2 3.55 4218 1823 946 100800 1,741.8 41.45 121880 734037 2717600 146.6
1986 7 1.91 4460 2125 990 111900 1,805.4 45.62 138563 769155 2896700 164
1987 6.2 3.66 4736 2350 1004 127200 1,620.5 45.61 151684 854288 3097000 164.2
1988 5.5 4.08 5100 2602 1064 138300 1,488.1 45.52 114566 909238 3350100 175.9
1989 5.3 4.83 5482 2857 1144 148800 1,376.1 46.93 93141 991105 3594500 180.8
1990 5.6 5.39 5801 3233 1253 149800 1,192.7 48.21 80864 1031922 3835500 176.9
1991 6.8 4.25 5992 3665 1324 147200 1,013.9 49.6 31135 1054996 3980100 157.9
1992 7.5 3.03 6342 4064 1381 144100 1,199.7 51.17 39212 1091223 4236900 176.1
1993 6.9 2.96 6667 4411 1409 147700 1,287.6 53.46 70311 1154341 4483600 193.9
1994 6.1 2.61 7085 4692 1462 154500 1,457.0 53.99 98493 1258579 4750800 216.1
1995 5.6 2.81 7414 4974 1516 158700 1,354.1 54.66 96384 1351801 4987300 220.3
1996 5.4 2.93 7839 5225 1561 166400 1,476.8 55.29 104065 1453055 5273600 235.8
1997 4.9 2.34 8332 5413 1601 176200 1,474.0 55.45 108273 1579240 5570600 254
1998 4.5 1.55 8794 5526 1653 181900 1,616.9 51.56 166140 1721733 5918500 280.7
1999 4.2 2.19 9354 5656 1702 195600 1,640.9 51.23 264239 1822459 6342800 309.7
2000 4 3.38 9951 5674 1789 207000 1,568.7 52.47 378780 2025198 6830400 321.4
2001 4.7 2.83 10286 5807 1863 213200 1,602.7 55 364393 1991142 7148800 342
2002 5.8 1.59 10642 6228 2011 228700 1,704.9 54.45 420524 1853149 7439200 359.7
2003 6 2.27 11142 6783 2160 246300 1,847.7 56.18 494183 1782321 7804000 358.2
2004 5.5 2.68 11868 7379 2293 274500 1,955.8 57.71 609345 1880126 8285100 359.5
2005 5.1 3.39 12638 7933 2472 297000 2,068.3 61.05 714176 2153625 8819000 361.6
2006 4.6 3.24 13398 8507 2655 305900 1,800.9 66.63 759240 2406876 9322700 346.6
2007 4.6 2.85 14077 9008 2729 313600 1,355.0 69.72 702099 2568001 9806300 349.9
2008 5.8 3.85 14441 10023 2982 292600 905.5 75.36 698802 2523991 10104500 291
2009 9.3 -0.34 14256 11910 3518 270900 554.0 75.41 374908 2104989 10001300 269.4
2010 9.6 1 14500 13300 3721 272400 586.9 75.89 497824 2162724 10500000 303

In part 2 of this blog I will evaluate the impact of the parameters in the above model by finding a linear regression solution.

My Book: Is America Dying? (Amazon.com, Barnes and Noble)

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