D2.Eco.11.9-12C3 FrameworkSocial StudiesEconomicsGrades 9-12

D2.Eco.11.9-12: Using Economic Indicators to Analyze the Present and Forecast the Future

In plain English: D2.Eco.11.9-12 is the C3 Framework economics indicator for grades 9-12 that asks students to use economic indicators to analyze the current and future state of the economy. Students sort indicators into leading, coincident and lagging, read official forecasts and their ranges, and test a past forecast against what actually happened.

Use economic indicators to analyze the current and future state of the economy.

C3 Framework for Social Studies (NCSS) · Dimension 2: Applying Disciplinary Concepts and Tools · Discipline: Economics · The National Economy · Official standard

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Lesson Plan

65-75 min

Overview

D2.Eco.11.9-12 asks students to use economic indicators to analyze both the current and the future state of the economy. An economic indicator is a statistic that tells us something about how the economy is doing, such as the unemployment rate or the number of building permits. Students learn to sort indicators by timing: leading indicators tend to turn before the economy does, coincident indicators move with it, and lagging indicators turn afterward. They read official forecasts, with their medians and ranges, and ask how far to trust them.

The lesson pairs three real sources with an invented one. In 1913, the economist Wesley Clair Mitchell described the "business barometers" of his day and the new ones the country needed (Source 1). The Federal Reserve's staff reviewed the economy and forecast 2008 and 2009 in December 2007, at the very start of a recession they did not yet see (Sources 2 and 3), and students test that forecast against what happened. They then read Federal Reserve officials' projections from September 2026 and analyze an invented country's indicator report (Source 4). Activities include an indicator card sort, a forecasting challenge set in December 2007 and a structured discussion on how much forecasts should be trusted.

Learning Objectives

By the end of this lesson, students will be able to:

Classify economic indicators as leading, coincident or lagging and explain the reason for each timing
Use coincident and lagging indicators to describe the current state of the economy, with evidence
Use leading indicators and official projections, including their ranges, to make and justify a forecast
Evaluate a past forecast against outcomes and explain why forecasts often miss turning points
Calculate changes, rates and spreads from official and invented indicator data

Prior Knowledge Required

Students should already be comfortable with:

Using data to evaluate employment, unemployment, inflation, production, income and growth D2.Eco.11.6-8
Using current data to explain how spending, production and the money supply affect conditions D2.Eco.10.9-12
Integrating quantitative analysis such as charts and data with text RH.9-10.7
Calculating percent change and reading a table of rates

Lesson Procedure

65-75 minutes of class time across 5 phases.

Warm-Up5-10 minutes
Warm-Up Prompt
"A weather forecaster looks at the sky today, but also at clouds far to the west and at falling air pressure. If you wanted to forecast the economy six months from now, what would be your 'clouds to the west'? Name two things you would watch and say why they might change before the rest of the economy does."
Take answers such as home sales, store sales, layoffs or stock prices. Sort them on the board into three columns without naming them yet: things that change early, things that change at the same time as the economy, and things that change late. Then name the columns: leading, coincident and lagging. Tell students that D2.Eco.11.9-12 asks them to use all three kinds to say where the economy is now and where it is likely to go.

Direct Instruction20 minutes

Key terms for D2.Eco.11.9-12 (working definitions)
Term	Meaning	Example
Business cycle	The repeated rise and fall of economic activity: expansion, peak, contraction (recession) and trough	The expansion that ended in December 2007
Leading indicator	A statistic that tends to turn before the economy does, because it reflects plans and expectations	Building permits: homes are planned before they are built
Coincident indicator	A statistic that moves with the economy and shows its current state	Payroll employment, industrial production, real GDP
Lagging indicator	A statistic that tends to turn after the economy does	The unemployment rate often keeps rising after a recession ends
Interest-rate spread	A long-term interest rate minus a short-term one; when it is negative the yield curve is called inverted	10-year Treasury rate minus the 3-month rate
Projection or forecast	An estimate of a future value, usually with a stated range of uncertainty	Federal Reserve officials' median projection for next year's unemployment rate
Potential growth	The rate at which the economy can grow over time without pushing inflation up or leaving resources idle	Growth "below its potential" means slack is building

Part 1: Why timing differs. Show Diagram 1. Leading indicators reflect decisions about the future: builders apply for permits before they hire crews, firms cut overtime before they lay people off, and lenders and investors set long-term interest rates from what they expect. Coincident indicators measure activity itself. Lagging indicators respond slowly: employers hesitate to hire again until they are sure a recovery is real, and price-setting adjusts over months. Stress that these are tendencies. Lead times vary, indicators give false signals, and economists disagree about how much weight each deserves. An inverted yield curve, for example, has come before many U.S. recessions, but some economists argue that changes in how bond markets work have weakened the signal.

Part 2: Reading official projections. Four times a year, the Federal Reserve Board members and the 12 Reserve Bank presidents who take part in meetings of the Federal Open Market Committee (FOMC), which sets U.S. monetary policy, publish their own projections; 18 participants submitted them in September 2026. Read the median as the middle forecast, and the central tendency and range as a measure of disagreement.

Federal Reserve officials' projections, September 2026 (real data: Summary of Economic Projections, released September 16, 2026, Table 1 medians and Figure 1 actual values). GDP and inflation are percent changes from the fourth quarter of the year before; unemployment is the fourth-quarter average; the federal funds rate is the year-end midpoint. On September 16, 2026, the Committee set the target range for the federal funds rate at 3-3/4 to 4 percent.
Measure	2025 actual	2026	2027	2028	2029	Longer run
Real GDP growth (%)	2.0	2.3	2.4	2.2	2.1	2.0
Unemployment rate (%)	4.5	4.1	4.1	4.1	4.1	4.2
PCE inflation (%)	2.8	3.7	2.3	2.1	2.0	2.0
Core PCE inflation (%)	2.9	3.4	2.5	2.2	2.0	not collected
Federal funds rate (%)	3.6	4.1	4.1	3.9	3.6	3.2

The same release: how much officials disagreed about real GDP growth (median, central tendency and full range of the 18 participants' projections). The central tendency drops the three highest and three lowest projections.
Real GDP growth (%)	2026	2027	2028	Longer run
Median	2.3	2.4	2.2	2.0
Central tendency	2.2-2.4	2.2-2.6	2.1-2.3	2.0-2.2
Range	2.1-2.6	2.0-2.9	1.8-2.6	1.7-2.5

Future: reading a projected path (real data)
Use the September 2026 table. Describe the path officials projected for PCE inflation from 2025 to the longer run.
Result: PCE inflation was 2.8% in 2025, is projected to rise to 3.7% in 2026 (up 3.7 - 2.8 = 0.9 points), then fall to 2.3% in 2027 and 2.1% in 2028, reaching the 2.0% goal in 2029 and the longer run. The forecast says inflation is above the goal now but is expected to return to it over about three years.
Future: measuring uncertainty (real data)
For real GDP growth in 2027, compare the width of the central tendency with the width of the full range.
Result: Central tendency 2.2-2.6: width 0.4 points. Range 2.0-2.9: width 0.9 points, more than twice as wide. Officials agree on the general direction, but a forecast of "2.4%" really means "probably somewhere around 2 to 3%."
Leading: an interest-rate spread (invented)
Invented data: the 10-year government bond rate is 4.10% and the 3-month rate is 4.55%. Find the spread and explain the signal.
Result: Spread = 4.10 - 4.55 = -0.45 percentage points: the curve is inverted. Investors accept a lower long-term rate than the short-term rate, which suggests they expect short-term rates to fall, often because they expect the economy to weaken.
Leading: a composite index (invented)
Invented data: a leading index falls 0.4%, then 0.6%, then 0.9% in three straight months. By how much did it fall in total?
Result: 0.996 x 0.994 x 0.991 = 0.9811..., a total fall of about 1.9%. Three straight and growing declines are often read as a warning sign, but a single month's fall usually is not.
Lagging: unemployment after a turning point (real data)
Use the outcome table. The recession began in December 2007 and ended in June 2009. How did the annual unemployment rate move from 2007 to 2010?
Result: 4.6% (2007), 5.8% (2008), 9.3% (2009), 9.6% (2010): up 9.6 - 4.6 = 5.0 points in total, and still rising in 2010, after the recession had ended. That is the lagging pattern.

Teacher tip. Students often treat a projection as a promise. Have them say each projection aloud as "officials expect, under their own assumptions about policy, that..." and name one thing that could make it wrong.

Guided Practice15 minutes
Barometers in 1913. Context note: Wesley Clair Mitchell (1874-1948) taught economics at the University of California and later helped found the National Bureau of Economic Research in 1920, the private group that still dates U.S. recessions. His 1913 book Business Cycles studied how prosperity, crisis and depression follow one another. In Mitchell's day there was no official GDP, no monthly unemployment rate and no Federal Reserve forecast. A "barometer" was any statistic used, like a weather barometer, to read what was coming. "Bank clearings" were the total of checks passing between banks, a rough measure of business volume. Read Source 1 together.
Apart from such specific reforms in economic organization, progress lies in the direction of bettering our forecasts of business conditions. For when coming troubles are foreseen they may be mitigated often, and sometimes averted.
The uncertainty attending present forecasts of business conditions arises chiefly from the imperfections of our knowledge concerning these conditions in the immediate past and in the present. For, since business cycles result from processes of cumulative change, the main factors in shaping tomorrow are the factors at work yesterday and today.
[...]
The American man of affairs who seeks to keep informed about the trend of business conditions at large relies upon the financial columns of his daily paper, supplemented perhaps by one or two of the financial weeklies and a special trade journal. The data which he can compile from these sources cover a considerable range.
[...]
Fluctuations in the volume of business must be estimated from various sources: bank clearings, railway gross earnings, number of idle cars, imports and exports, coal, copper, pig-iron, and steel output, shipments of grain, cotton, live stock, etc. Government crop reports help to forecast the probable state of trade in various agricultural sections. [...]
[...]
Some idea of the volume of investment and speculation going on may be obtained from the transactions of the New York Stock Exchange, the number of building permits granted, the mileage of railway under construction, and from the less systematic news items concerning fresh contracts let, security issues offered to the public, and the like.
[...]
Though far from complete, this list of materials for gauging the trend of business conditions is long. In fact, it is all too long for the average business man. To compile and to analyze the available data requires more time, more effort, more statistical skill, or more analytic ability than most men have to spend on the task. Hence the typical man of affairs skips the bewildering evidence and reads only the summary conclusions drawn by the editor of his financial paper or by the forecasting agency to which he subscribes. [...]
[...]
Among the most needed additions to the list of American business barometers are the following:
A general index number of the physical volume of trade could be made from data showing the production of certain staples, the shipments or receipts of others, the records of foreign commerce, and similar sources. [...]
[...]
Certain states—notably New York and Massachusetts—have made a beginning in the direction of providing statistics of unemployment. But we have no comprehensive data of this kind comparable with those provided by England, France, and Germany. Their value, not only as an index of welfare among wage-earners, but also as reflecting changes of activity within important industries and changes in the demand for consumers' goods is such as to make the present lack a matter of general concern.
Wesley Clair Mitchell, Business Cycles, Part III, chapter XIV, section IV: The Forecasting of Business Conditions (Source 1, 1913) (1913). Public domain (published 1913). Source text.
1. The purpose of forecasting. Prompt: in paragraph 1, why does Mitchell think better forecasts matter? Teacher note: troubles that are foreseen "may be mitigated often, and sometimes averted."
2. Present and future. Prompt: paragraph 2 links forecasting the future to knowing the present. Restate his argument. Teacher note: cycles come from cumulative change, so "the main factors in shaping tomorrow are the factors at work yesterday and today"; bad data about today means bad forecasts.
3. Then and now. Prompt: list the indicators in paragraphs 4 and 5. Which are still used today, and which would we now classify as leading? Teacher note: building permits and stock market activity are still watched as leading indicators; railway earnings and pig-iron output were the production data of the day.
4. Too much data. Prompt: what problem does paragraph 6 describe, and how do summary measures help? Teacher note: the list is "all too long for the average business man," so readers rely on summaries; single measures such as GDP and composite indexes do that job today.
5. Missing indicators. Prompt: paragraphs 7-9 ask for two new measures. Name them and their modern descendants. Teacher note: an index of the physical volume of trade, which became measures such as industrial production and real GDP, and national unemployment statistics, which the United States began to collect every month in 1940 in the survey that became today's Current Population Survey.

Independent Practice15 minutes

Testing a forecast. Context note: the Federal Reserve's staff economists prepare a review of the economy and a forecast for every FOMC meeting, and the minutes summarize them. Sources 2 and 3 come from the meeting of December 11, 2007. Nobody in the room knew it yet, but the National Bureau of Economic Research later dated the start of a recession to that same month. Students read both sources, make their own notes on what was weak and what was still strong, and only then look at the outcome table and Diagram 2.

The information reviewed at the December meeting indicated that, after the robust gains of the summer, economic activity decelerated significantly in the fourth quarter. Consumption growth slowed, and survey measures of sentiment dropped further. Many readings from the business sector were also softer: Industrial production fell in October, as did orders and shipments of capital goods. Employment gains stepped down during the four months ending in November from their pace earlier in the year. Headline consumer price inflation moved higher in September and October as energy prices increased significantly; core inflation also rose but remained moderate.
The slowing in private employment gains was due in large part to the ongoing weakness in the housing market. Employment in residential construction posted its fourth month of sizable declines in November, and employment in housing-related sectors such as finance, real estate, and building-material and garden-supply retailers continued to trend down. [...] Some indicators from the household survey also suggested softening in the labor market, but the unemployment rate held steady at 4.7 percent through November.
[...]
In the housing market, new home sales were below their third-quarter pace, and sales of existing homes were flat in October following sharp declines in August and September. [...] Single-family housing starts stepped down again in October after substantial declines in the June-September period. Yet, because of sagging sales, builders made only limited progress in paring down their substantial inventories. Single-family permit issuance continued along the steep downward trajectory that had begun two years earlier, which pointed toward further slowing in homebuilding over the near term.

Federal Open Market Committee, Board of Governors of the Federal Reserve System (US government work), Minutes of the Federal Open Market Committee, December 11, 2007: Staff Review of the Economic Situation (Source 2) (2008). US government work (17 U.S.C. 105). Source text.

In the forecast prepared for this meeting, the staff revised down its estimate of growth in aggregate economic activity in the fourth quarter. Although third-quarter real GDP was revised up sharply, most available indicators of activity in the fourth quarter were more downbeat than had previously been expected. [...] The staff also marked down its projection for the rise in real GDP over the remainder of the forecast period. Real GDP was anticipated to increase at a rate noticeably below its potential in 2008. Conditions in financial markets had deteriorated over the intermeeting period and were expected to impose more restraint on residential construction as well as consumer and business spending in 2008 than previously expected. In addition, compared with the previous forecast, higher oil prices and lower real income were expected to weigh on the pace of real activity throughout 2008 and 2009. By 2009, however, the staff projected that the drag from those factors would lessen and that an improvement in mortgage credit availability would lead to a gradual recovery in the housing market. Accordingly, economic activity was expected to increase at its potential rate in 2009. [...] As pressures from these sources lessened over the remainder of 2008 and in 2009, both core and headline price inflation were projected to edge down, and headline inflation was expected to moderate to a pace slightly below core inflation.

Federal Open Market Committee, Board of Governors of the Federal Reserve System (US government work), Minutes of the Federal Open Market Committee, December 11, 2007: Staff Economic Outlook (Source 3) (2008). US government work (17 U.S.C. 105). Source text.

What happened next (real data: BEA NIPA Table 1.1.1, real GDP percent change; BLS Current Population Survey annual averages; BLS CPI-U U.S. city average, annual averages, 1982-84 = 100).
Year	Real GDP growth (%)	Unemployment rate, annual average (%)	CPI-U, annual average
2006	2.8	4.6	201.6
2007	2.0	4.6	207.342
2008	0.1	5.8	215.303
2009	-2.6	9.3	214.537
2010	2.7	9.6	218.056

Questions for Sources 2 and 3:

Source 2, paragraph 1: list three indicators that had weakened by December 2007.
Source 3: what did the staff expect for real GDP in 2008 compared with its potential?
Use the outcome table: by how much did real GDP growth in 2009 fall short of growth in 2007?
Was the staff right about the direction of the economy, about its size, or about neither? Use evidence.

Answers for the teacher: (1) Any three of consumption growth, sentiment surveys, industrial production, orders and shipments of capital goods, and employment gains. (2) Growth "noticeably below its potential," a slowdown but not a recession. (3) 2.0 - (-2.6) = 4.6 percentage points. (4) The staff got the direction right for 2008, a slowdown led by housing and credit, but badly underestimated the size: instead of the gradual recovery it projected, output fell in 2009. Accept answers that credit the staff for spotting the housing and credit risks.

Closure10-15 minutes
Analyze an invented country. Students read Source 4, an invented quarterly indicator report. They will use it for quiz questions 13-16, so they should keep it in front of them.
Invented scenario, written for this page. Norvala is a fictional country of about 60 million people. Its statistics office publishes a quarterly indicator report. The figures below are for last year's four quarters, Q1 to Q4, in order.
Leading indicators. Building permits issued (thousands of homes): 66.0, 62.7, 58.8, 54.5. New claims for unemployment benefits (weekly average, thousands): 41.0, 42.5, 45.1, 48.2. Consumer expectations index (Q1 = 100): 100, 97, 92, 88. Interest-rate spread (10-year government bond rate minus 3-month rate, percentage points): +1.2, +0.6, -0.1, -0.4.
Coincident indicators. Real GDP growth (annual rate, percent): 3.0, 2.8, 2.6, 2.1. Payroll jobs (millions): 28.40, 28.46, 28.50, 28.51.
Lagging indicators. Unemployment rate (percent): 3.9, 3.8, 3.8, 3.9. Core inflation (percent from a year earlier): 3.4, 3.6, 3.7, 3.8.
The report ends: "Most of the economy still looks strong today. The question for next year is whether it will stay that way."
SVHS (invented scenario written for this page), Norvala Quarterly Indicator Report (Source 4: invented scenario) (2026). Original passage written for this page.
Exit ticket: "In two sentences, describe Norvala's economy today using one coincident indicator, and say what one leading indicator suggests about next year."
Teacher note. The page uses official U.S. projections as data and does not judge any policy decision. When you update the projection table for a new release, keep the same questions: what do officials expect, how much do they disagree, and what could make them wrong.

Differentiation Strategies

For Struggling Students

Give a three-column organizer (leading, coincident, lagging) with one example already filled in for each column
Pre-highlight the indicator words in Sources 2 and 3 and have students mark each one up or down
Provide the formulas for a change in points, a percent change and a spread on a card

For Advanced Students

Compare the June 2026 and September 2026 projections in the Summary of Economic Projections and explain what new information might have changed them
Research how the Conference Board builds its private Leading Economic Index and evaluate one criticism of it
Write a short memo on why forecasts tend to miss turning points, citing Mitchell's idea of cumulative change

Assessment Guidance

What to Look For

Strong answers keep the present and the future apart: they describe the current state with coincident data and explain a forecast with leading indicators or projections, then say how confident the forecast can be and what could make it wrong. Watch for four errors: treating a lagging indicator such as the unemployment rate as an early warning; reading a median projection as a certainty and ignoring the range; confusing a change in percentage points with a percent change; and judging a forecast only by whether its exact number came true, rather than by its direction and reasoning.

Classroom Activities

3 Activities

Lead, Coincide or Lag? Indicator Card Sort

15 minGroups of 3

Groups sort 12 real U.S. indicator cards into leading, coincident and lagging, and write on each card the reason for its timing: does it reflect a plan or expectation, current activity, or a slow reaction?

The 12 Indicator Cards

Building permits for new private housing
New (initial) claims for unemployment insurance
A broad stock price index
A consumer expectations index from a survey
The spread between 10-year and 3-month Treasury interest rates
Payroll employment
Industrial production
Real GDP
Real personal income excluding government benefits
Average length of time people have been unemployed
The prime interest rate that banks charge their best borrowers
Labor cost per unit of output

Sample Answers for the Teacher

Leading (5): cards 1-5. Each reflects plans or expectations: permits come before building, layoffs show up in new claims before they show up in totals, and stock prices, consumer expectations and long-term rates are set by people looking ahead.
Coincident (4): cards 6-9, which measure current activity and income.
Lagging (3): cards 10-12. Long spells of unemployment build up after a downturn; banks change the prime rate after the Federal Reserve moves; labor costs adjust slowly.
This follows the usual classification, such as the one used in composite indexes. Accept a different placement if the group gives a sound reason, for example that stock prices sometimes give false signals.

Discussion Questions

Card 2 rises when the economy weakens. How does that change the way you read it as a signal?
Why might one leading indicator falling for a single month be a weak signal?

The December 2007 Forecast Challenge

15-20 minGroups of 3-4

Before seeing the outcome table, groups play the Federal Reserve staff in December 2007. Using only Source 2, each group forecasts real GDP growth, the unemployment rate and CPI inflation for 2008 and 2009, and writes one sentence of evidence for each. Then the teacher reveals the outcome table and Diagram 2.

Forecast Sheet

For each of 2008 and 2009, choose a range for real GDP growth: below 0%, 0-1.9%, 2-2.9% or 3% and above.
Write your forecast for the annual unemployment rate in 2008 and 2009.
Will CPI inflation be higher or lower than in 2007?
Name the one indicator from Source 2 that most shaped your forecast.

Scoring and Debrief for the Teacher

Score 1 point for each GDP range that matches the outcome (2008: 0-1.9%; 2009: below 0%) and 1 point for each unemployment forecast within 1 percentage point of the outcome (5.8% and 9.3%).
Most groups, like the staff, forecast a slowdown but not a deep fall. Ask: which indicators in Source 2 were leading and pointed down (housing permits, sentiment, orders), and which were lagging and still looked calm (the unemployment rate)?
Point out that the staff also lacked data we have now: later revisions changed the GDP numbers for these years.

Modification for Advanced Students

Ask groups to write a one-paragraph risk scenario that would make their forecast wrong, and to name the indicator that would warn of it first.

Structured Discussion: How Much Should We Trust Forecasts?

15-20 minPairs within groups of 4

Each group of four splits into two pairs. One pair argues Position A and the other Position B, using the sources; then they switch sides; then the group writes a joint statement. The rubric scores the use of evidence, not the side.

The Two Positions

Position A: Look ahead. Decision makers should lean on leading indicators and forecasts, because, as Mitchell wrote, troubles that are foreseen can be "mitigated often, and sometimes averted," and many decisions (building a factory, hiring, setting interest rates) take months to have effects.
Position B: Trust today's data. Decision makers should lean on current, measured data and act cautiously, because forecasts often miss turning points, as the December 2007 forecast did, and leading indicators give false signals.

Evidence Each Side Might Use

A: Source 1, paragraph 1; the permit trend in Source 2, paragraph 3, which did point the right way; the projected return of inflation to 2% in the September 2026 table.
B: Source 3's projection for 2009 set beside the outcome table; the width of the ranges in the 2026 projections; Mitchell's warning in paragraph 2 that even current knowledge is imperfect.
A strong joint statement usually combines the two: use forecasts, but state their ranges, watch several indicators, and update often.

Diagrams & Visual Aids

2 diagrams

Diagram 1: How Indicators Move Through a Business Cycle

A stylized picture, not data: three identical waves shifted in time. The coincident curve (solid) shows the economy itself. The leading curve (dashed) reaches its peak about a tenth of a cycle earlier, and the lagging curve (dotted) about a tenth of a cycle later. Real indicators are much noisier, and the lead time changes from cycle to cycle. For indicators such as the unemployment rate and jobless claims, which rise when the economy weakens, the curve is upside down.

Diagram 2: What Happened After the December 2007 Forecast

Drawn to scale from BEA annual data (real GDP, percent change from the preceding year, current vintage). The shaded band marks the recession as dated by the National Bureau of Economic Research, a private research organization: it began in December 2007 and ended in June 2009. Annual bars blur the timing: growth for 2008 as a whole was close to zero even though output was falling by the end of the year.

Homework Assignment

~30 min

D2.Eco.11.9-12 Homework: Indicators, Forecasts and the State of the Economy

Directions: Use the tables in Direct Instruction and Independent Practice and Sources 1 and 4. Show every calculation, and say what each number tells you about the current or future state of the economy.

Part 1: Working With Indicator Data (Problems 1-3)

Use the outcome table. (a) Calculate CPI inflation for 2008. (b) Using inflation, real GDP growth and unemployment, describe the state of the economy in 2008 in two sentences. (c) Which of the three measures was lagging behind the turn in the economy?
Use the September 2026 projections. (a) By how many percentage points are PCE inflation and core PCE inflation projected to fall from 2026 to 2027? (b) How far above the 2 percent goal is each projected to be in 2027? (c) How wide is the full range of real GDP projections for 2028, and what does that width tell you?
Use Source 4. (a) How many payroll jobs did Norvala add from Q1 to Q4, and from Q3 to Q4? (b) By how much did core inflation change from Q1 to Q4? (c) By what percent did the consumer expectations index fall from Q1 to Q4?

Part 2: Analyzing the Present and the Future (Problems 4-6)

Classify each indicator as leading, coincident or lagging, and give a one-sentence reason: (a) manufacturers' new orders for consumer goods; (b) housing starts; (c) retail sales adjusted for inflation; (d) the number of people employed in the household survey; (e) consumer credit outstanding compared with personal income; (f) inflation for services excluding energy.
Choose three of the barometers Mitchell lists in Source 1, paragraphs 4 and 5. For each, name a modern indicator that does the same job, and say whether it is leading or coincident. Then explain whether his complaint in paragraph 6 still applies today.
Write an indicator brief (8-10 sentences) on the U.S. economy today. Use the September 2026 projections and look up the latest value of two indicators at bls.gov or bea.gov. Describe the current state with coincident data, give a forecast for the next year with at least one leading indicator or projection, state how confident you are and why, and name one risk that could make the forecast wrong.

Rubric

Criterion	Full Credit (2 pts)	Partial Credit (1 pt)	No Credit (0 pts)
Calculations	Correct changes, percents and ranges with units (points or percent)	Right method with small errors	Wrong or missing
Indicator Timing	Classifies indicators correctly with reasons tied to plans, current activity or slow reactions	Correct labels without reasons	Mostly incorrect
Present and Future	Separates the current state from the forecast and supports each with the right kind of indicator	Mixes current and future evidence	No clear analysis
Uncertainty	States confidence, uses ranges, and names a specific risk	Mentions uncertainty in general terms	Treats forecasts as certain

Quiz: 20 Questions

Interactive, with answers

Instructions

Questions 1-4 and 18-19 use Source 1 in Guided Practice. Questions 6-8, 10 and 19 use Sources 2 and 3 in Independent Practice, and Questions 7, 9 and 17 use the outcome table there. Questions 11, 12, 18 and 20 use the September 2026 projection tables in Direct Instruction. Questions 13-16 use Source 4, the invented Norvala report in Closure. Your score updates as you answer, and Reset quiz clears everything.

Multiple choice: pick an option to check it. Short answer: write your answer, then reveal the model answer.

0 of 20 answered · 0 correct

Question 1 of 20 · Multiple Choice
In Source 1, paragraph 2, what does Mitchell say is the main reason forecasts of business conditions are uncertain?
Question 2 of 20 · Multiple Choice
Source 1, paragraph 4, says "Government crop reports help to forecast the probable state of trade in various agricultural sections." Why could a crop report help forecast trade?
Question 3 of 20 · Multiple Choice
According to Source 1, paragraph 9, why did Mitchell want national statistics of unemployment?
Question 4 of 20 · Multiple Choice
Source 1, paragraph 8, proposes "a general index number of the physical volume of trade." Which modern indicator comes closest to that idea?
Question 5 of 20 · Multiple Choice
Many economists treat average weekly hours worked in manufacturing as a leading indicator. Which reason best explains that?
Question 6 of 20 · Multiple Choice
According to Source 2, paragraph 2, what was the main cause of the slowdown in private job gains in late 2007?
Question 7 of 20 · Multiple Choice
Source 2, paragraph 2, reports that "the unemployment rate held steady at 4.7 percent through November." What does that show about using the unemployment rate in December 2007?
Question 8 of 20 · Multiple Choice
What did the staff forecast in Source 3 expect for economic activity in 2009?
Question 9 of 20 · Multiple Choice
Use the outcome table. What was CPI inflation in 2009?
Question 10 of 20 · Multiple Choice
Source 2, paragraph 3, says single-family permit issuance "pointed toward further slowing in homebuilding over the near term." Why could permits point ahead in this way?
Question 11 of 20 · Multiple Choice
Use the September 2026 projections. How is the unemployment rate expected to change from the fourth quarter of 2025 to the fourth quarter of 2026?
Question 12 of 20 · Multiple Choice
On September 16, 2026, the federal funds target range was 3-3/4 to 4 percent. The median projection for the end of 2026 is 4.1 percent. What does that imply?
Question 13 of 20 · Multiple Choice
Use Source 4. By what percent did Norvala's building permits change from Q1 to Q4?
Question 14 of 20 · Multiple Choice
Use Source 4. In which quarter did Norvala's interest-rate spread first turn negative, and what is that usually taken to signal?
Question 15 of 20 · Multiple Choice
Use Source 4. By what percent did new claims for unemployment benefits change from Q1 to Q4?
Question 16 of 20 · Short Answer
Use Source 4. Write a 3-4 sentence analysis of Norvala's current state and of what is likely next year. Use at least one coincident, one leading and one lagging indicator, and say how confident you are.
Question 17 of 20 · Short Answer
Explain why the unemployment rate is usually a lagging indicator rather than a leading one. Use the outcome table as evidence.
Question 18 of 20 · Short Answer
Mitchell complains in Source 1, paragraph 6, that the list of barometers is "all too long for the average business man." How do the median and central tendency in the September 2026 projections tables address that problem, and what do they leave out?
Question 19 of 20 · Short Answer
Mitchell (Source 1, paragraph 2) says forecasts suffer from imperfect knowledge of "the immediate past and the present." Use the first sentences of Source 3 to show that problem in December 2007.
Question 20 of 20 · Short Answer
Use the September 2026 projections and the 2025 actual values. In 3-4 sentences, analyze the current and expected state of the U.S. economy, and give one reason the forecast could turn out wrong.

0 of 20 answered · 0 correct

Frequently Asked Questions

10 Questions

What does D2.Eco.11.9-12 mean?

D2.Eco.11.9-12 asks high school students to use economic indicators to analyze where the economy is now and where it is heading. The full text is "Use economic indicators to analyze the current and future state of the economy." Students must do both halves: describe the present with evidence and make a supported, hedged forecast.

How is D2.Eco.11.9-12 different from D2.Eco.11.6-8?

The middle school indicator asks students to evaluate the current state using measures such as unemployment, inflation and GDP. D2.Eco.11.9-12 adds the future: leading indicators, official projections and their ranges, and judging how reliable a forecast is.

What is the difference between leading, coincident and lagging indicators?

They differ in timing. Leading indicators, such as building permits and new jobless claims, tend to turn before the economy; coincident indicators, such as payroll jobs and industrial production, move with it; lagging indicators, such as the unemployment rate and core inflation, turn afterward. The timing is a tendency, not a rule.

Who decides when a recession starts and ends?

In the United States, the dates are set by the Business Cycle Dating Committee of the National Bureau of Economic Research, a private research organization. It looks at many indicators, not just two quarters of falling GDP, and it announces its dates months after the turning point.

What is the Summary of Economic Projections?

It is a table the Federal Reserve publishes four times a year with its policymakers' forecasts for growth, unemployment, inflation and the federal funds rate. It reports the median, a central tendency and the full range, and each participant's projection assumes the policy that participant thinks is appropriate.

Why do economic forecasts so often miss recessions?

Because turning points come from changes that build on each other and are hard to see in data that arrive late and get revised. The December 2007 Federal Reserve staff forecast on this page is a well-documented example. Forecasts are still useful when they are read with their ranges and updated as new data arrive.

What does an inverted yield curve mean?

It means short-term interest rates are higher than long-term rates, so the spread between them is negative. Many economists watch it as a warning sign because it has come before several U.S. recessions, but others argue the signal is weaker than it used to be; students should treat it as one piece of evidence.

Can D2.Eco.11.9-12 be taught with current data?

Yes, and it should be. The Bureau of Labor Statistics, the Bureau of Economic Analysis and the Federal Reserve all post release calendars. Replace the September 2026 projection table with the latest release and keep the same questions about levels, paths and ranges.

Is D2.Eco.11.9-12 taught in Economics or in U.S. History?

It is usually taught in a high school Economics course, often in the macroeconomics unit before monetary and fiscal policy. U.S. History teachers can use the 2007-2009 recession sources in a unit on recent history.

What comes after D2.Eco.11.9-12?

The next step is D2.Eco.12.9-12, which asks students to evaluate monetary and fiscal policy in different economic conditions. Analyzing the current and future state of the economy is the first step in deciding which policy, if any, fits.