Michael

GDP growth is not the perfect indicator but it overall indicates the economic activity occurring in an economy since it measures many different leading economic indicator trends.

• Consumer Confidence which increases demand.
• Housing starts.
• Housing prices which increases consumer confidence.
• Manufacturing growth.
• Factory orders.
• Stock Market growth which creates the wealth effect which increases demand.
• Financial health of banks allowing businesses to borrow and expand.
• Businesses confidence which causes expansion and replacement of equipment.
• etc.

Job creation and unemployment rates are trailing indicators and can be skewed by government policies. For example, Japan has a low unemployment rate either forced upon companies by government policies and/or tradition but the country has a very unhealthy economy. With a unhealthy economy and a low unemployment rate, this puts a heavy burden on businesses restricting profits and expansion.

Eventually as GDP grows, business profits rise and job creation occurs which reduces the need for government spending and tax revenues increase reducing government deficits and possibly even creating a budget surplus.

If I could predict what would happen to an economy 6 months in advance, I'd be a genius.

paul32x

Personally, I prefer to get my information from the real world, not from an organisation that is funded by BANKS AND BANKERS:

http://www.cepr.org/content/supporters-cepr