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What is an Economic Trend? - Definition & Overview

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  • 0:00 Economic Trend Defined
  • 1:26 Examples
  • 3:14 Lesson Summary
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Lesson Transcript
Instructor: Cori Arnold
Buying groceries or borrowing money are just two ways economic trends play a part in our daily lives. In this lesson, we will look at a few of the most significant economic trends to understand how they affect us.

Economic Trend Defined

Before we delve further into the meaning of economic trend, let's first gain an understanding of its individual parts. The first word, economic, refers to an economy. An economy is made up of all of the financial transactions between companies and consumers in a region or country. Generally, when an economy is referred to, it is toward a specific country. For example, we hear about the U.S. economy every day in the news.

The second part of the phrase, trend, can be thought of as a pattern. In most contexts, trends are formed and interpreted from sets of data. For example, if someone plotted the stock price at four o'clock every day for three weeks, the dots would create a pattern, or a trend, and there would be fifteen dots on the chart. The chart on the left shows these dots. The chart on the right, shows what happens when the dots are connected.

In this example, this stock price has an upward trend. We can interpret this because as the days pass by, shown on the horizontal axis, the price gets higher, shown on the vertical axis.

Now combining those two words together, we get economic trend which is an indicator that shows how a region or country is doing financially. The U.S. economy is almost always part of the news. We, like any economy, go through good times and bad times. What economic trends define your good and bad times?

Examples

Now that we have a general understanding of economic trends, let's look at some examples of the most significant and popular ones that help to define the type of economic climate we are experiencing. The first one is the unemployment rate. The unemployment rate measures the percentage of the labor force that is not working. This trend affects most of us personally. We may have experienced this firsthand. Each month data is collected from many individuals, and based on that data, the unemployment rate is published. This percentage affects the next economic trend, the consumer confidence index.

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