Series 7: 9.1.1.3 Important Lagging Indicators

9.1.1.3  Important Lagging Indicators

Consumer Price Index (CPI). The CPI is a monthly report released by the Bureau of Labor and Statistics. It measures changes in the price of a “basket of goods” that a typical consumer might purchase, including food and energy products. The CPI is considered the best measure of inflation. The release of the CPI has a large effect on both the equity and debt markets because it gives a strong indication of whether the Federal Reserve will alter interest rates.

Other lagging indicators:

• • Business spending
• • Unemployment rate
• • Prime rate charged by banks
• • Bank loans outstanding
• • Employment Cost Index (ECI)—monthly changes in employee wages and benefits

The exam may ask a question like, “Which of the following is the best sign that the economy is either