Key Terms to Know

What is gross domestic product (GDP)?

GDP is a monetary measure of the market value of all the final goods and services produced in a specific time frame. GDP is often used as a metric for international comparisons as well as a broad measure of economic progress and has been described as the “world’s most powerful statistical indicator of national development and progress.”

What is consumer confidence?

Consumer confidence is an economic indicator based on the level of consumer spending. With this indicator, increased consumer confidence signifies economic growth through increased consumer spending or consumption. On the other hand, decreasing consumer confidence signifies slowing economic growth and a reduction in spending.

Essentially, the more confident people feel about the economy, their jobs and incomes, the more likely they are to spend money. Declining consumer confidence is a sign of slowing economic growth and may indicate that the economy is facing headwinds.

What is 10-year Treasury note?

A 10-year Treasury note (T-note) is a debt obligation issued by the government with a maturity of 10 years upon initial issuance. A 10-year T-note pays interest at a fixed rate once every six months and pays the face value to the holder at maturity. They serve as a benchmark for other borrowing rates like mortgage rates, and when they fluctuate it can have significant implications across the financial and economic landscape. Interestingly, the U.S. government partially funds itself by issuing 10-year Treasury notes.

What is the labor market?

The labor market is defined as the supply and demand for labor—employees provide the supply, while employers provide the demand. Important aspects of the labor market include labor supply and demand, earnings, unemployment rate, labor force participation rate, employment-to-population ratio and more.

What is inflation?

Inflation has been a hot topic the past year. Using the Consumer Price Index (CPI), it measures how much more expensive goods and services has become over time and corresponds to a reduction in the purchasing power of money. So, inflation reduces the value of currency over time. With inflation, you can buy less today with $1 than you could yesterday.

What is fixed income?

Fixed income refers to any type of investment in which the borrower or issuer must make payments of a fixed amount on a fixed schedule until its maturity date. At maturity, investors are repaid the principal amount they had invested. Typical investments include government and corporate bonds, CDs and money market funds that offer a steady stream of income with less risk than traditional stock options.

What is the S&P 500?

The S&P 500 is a stock market index that tracks the financial performance of the top 500 publicly traded companies listed on stock exchanges in the U.S. It is widely considered one of the best gauges of large U.S. stocks, with an emphasis on market capitalization. Other examples of exchanges include New York Stock Exchange (NYSE) and the Nasdaq.

What are inventories?

Inventory is any item of property held in stock by a company that can include finished goods, work in progress goods and raw materials. Inventory is whatever products a company has that will earn it a profit and are classified as an asset on a businesses’ balance sheet.

Stay tuned for next quarter’s economic update.

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