Economics Made Simple

May 11, 2009

Interview with Randy Charles Epping, author of The 21st Century Economy--A Beginner's Guide [1]

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Mike Carruthers:
In order to sense when the economy will start to pick up again, it's important to understand the difference between leading and lagging economic indicators.

Randy Charles Epping:
Leading economic indicators are the ones that tell us where the economy's going. Unemployment is a lagging economic indicator, it tells us where the economy's been.

Economist Randy Charles Epping, author of the book The 21st Century Economy--A Beginner's Guide [1]

If you look at things like housing starts or you look at what companies do to buy new machines, or if they hire new people - those are the leading economic indicators that we should be looking at to really see where the economy's going in the years or the months ahead.

One of the things I've always wondered about is if unemployment is at about eight percent that means ninety-two percent of workers are still working. So why is the economy in such a mess if more than nine out of ten workers are still earning money?

Right now though they're not spending it and that's the problem. That's because people are hearing all of these economic disaster scenarios - and I'm not saying that experts are wrong in doing that.

But the fact that so many people have stopped spending money has slowed down the economy. And Randy says in the 21st Century it's important for all of us to think about investing globally.

Because as we've seen in the last six months, diversifications are really important - if you just look at the last six weeks the people who've invested abroad on average made money in the stock market - a lot of money.

To hear the complete unedited interview, click here. [2]