Economic indicators - H
List of indicators - H:
- Help Wanted Advertising Index
- Help-wanted index
- Housing starts
- Humphrey-Hawkins testimony
Help Wanted Advertising Index
What it is: 51 leading newspapers-based index gathering help-wanted ads in the most common areas of employment throughout the country. Why we care: It has successfully showed the peaks in nonfarm employment during recent 40 years and sometimes accompanying but delaying business cycles and the lows of the labor market indicator.
Help-Wanted Index - HWI
This is published every month by the Conference Board and based on 51 leading newspapers gathering help-wanted ads from all over the country. This index is the general showing of the U.S. labor market.
This shows the job market stability. The increased number of these advertisements shows high demand for labor and possible wages increase to attract new labor force. Low ads number signalizes of the labor market weakness and possible wages decrease due to workers acceptance for low ones.
This indicator looks after the number of houses construction of which has started. It is formed monthly and is the key indicator of the activity of residential construction.
This indicator let understand the builders' position concerning more building activities. Increasing activity is usually considered as an economic growth and stability forecast and is generally followed by a brief interest rates increase that can strengthen the currency for the similar period.
This testimony is one of the indicators that influence the mortgage interest tends. Some others are the Consumer Price Index and the Employment cost index. Their complexities, along with other factors or indicators, are analyzed by specialists in order to find out the mortgage interest trend.
The US monetary policy is ruled by the Federal Reserve. Short-term interest rates get an effective way for the FED to influence the amount of money issue and the activity of the economy and prices respectively. Low inflation, stable economy, and minimal unemployment are the general targets of the Federal Reserve. As well as the unemployment rate is stable low and the economy is developing predictably FED is trying to gain low inflation. The sum of the approximate new house payment, which is $1000, and other debts paid each month turns into the back ratio. Such expenses as car payments, minimum credit card payments, spousal support, child support and others make up other debts paid monthly. It does not include such payments as utility, utility payments, and individual retirement account. Here is an example of counting back end ratio. We take a sum of $1000 of house payment, $250 of monthly debt and divide the sum by $3500 of monthly earnings and we obtain a ratio 36.
A situation when both inflation and unemployment got high occurred in 1970s. The economy's reconstruction during the crisis decade was headed by Senator Hubert H. Humphrey and Congressman Augustus Hawkins. They were sure that the consistent actions of both president and Federal Reserve should be undertaken in order to get the unemployment and inflation rates back to their ordinary levels of the previous decades.
The Full Employment and Balanced Growth Act became a law in 1978 after President Jimmy Carter's signing. This legislate (the Humphrey-Hawkins Act) undertakes the President to report to the Congress of his goals concerning economical policy and the period estimated for these goals achievement. The Federal Reserve has to report to Congress twice a year of their prospects for the monetary policy either. This report, Humphrey-Hawkins Testimony, carried out by the chairman of the Federal Reserve, is analyzed carefully for any changes to be projected.
The Full Employment and Balanced Growth Act prepared in 1978 was sponsored by Humphrey and Hawkins. The "goals of maximum employment, stable prices, and moderate long term interest rates" were directed for the Federal Reserve to promote in this act. The obligation of Federal Reserve Board's work to be monitored was descried in the Act while passing the Congress. According to this rule, the third week of each February and July is the time for Federal Reserve chairman to testimony before the Congress. The main points of the testimony that is carried out before the House and Senate Banking Committees are the resume of present economic conditions and setting the possible variation of target values for a number of economic variables affecting inflation and growth rates.
The forecast for GDP growth, nominal and adjusted to the inflation (called real), unemployment rate of the civilians and the deflator of PCE chain-price is usually made in February regardless of the Humphrey-Hawkins legislation. July is the time for possible revisions announced. Monetary aggregates targets are also set at same time. Humphrey-Hawkins report and testimony is prepared for some period that is why both the meeting of the year and meeting in mid-year of FOMC are held within two days. It was the period of Paul Volcker's being a chairman of the Federal Reserve when Humphrey-Hawkins testimony had the most importance while in the early 1980s the importance of the economical indicators has faded for benefit of monetary aggregates targets. During the Greenspan's reign since 1987, each shade of the testimony is studied carefully in order to catch the chairman's ideas concerning Fed policy in future. After the official Humphrey-Hawkins Act expired in the late 1990s, the Federal Reserve chairman's testimony before Senate and Housing Banking Committees was no longer obligatory. However, as long as Congress created the act of Federal Reserve System, their cooperation is implied. The testifying of the chairman Alan Greenspan before House and Senate committees has happened much oftener than it was while the Humphrey-Hawkins Act was valid.