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February 25, 2018 

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HORIZONTAL ADDITION: In graphical analysis, the technique of combining two curves by adding the value of the variable on the horizontal or X axis for a given value of the variable on the vertical or Y axis. This is commonly done when deriving a market demand curve from a set of individual demand curves. The quantity demanded by every individual is added at a given price to identify the total market demand at that price.

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CONFERENCE BOARD, THE:

A private, non-profit, global organization established in 1916 that collects and distributes economic data to assist consumers, business leaders, and government policy makers in their economic decisions. The Conference Board is responsible for compiling the leading, coincident, and lagging economic indicators that are used to track business-cycle activity as well as the widely publicized Consumer Confidence Index. The Conference Board also convenes numerous conferences each year that provide forums to discuss and analyze pressing economic issues.
The Conference Board is a well-respected, non-profit organization with the goal of providing an objective forum for the investigation of important economic and business issues. It was formed in 1916 in response to ongoing economic turmoil marked by the lack of public confidence in the business sector and labor unrest that spawned a growing labor union movement.

The Conference Board was established as a means of bringing together business leaders from different industries to objectively discuss policy issues and to find solutions to existing problems. It was explicitly created as non-partisan organization that refrained from promoting the products of particular firms or industries and from distributing advertising or any form of "political propaganda."

It has expanded the scope of its activity significantly since the early 1900s. Two of its more important current functions are compiling business cycle indicators (leading, coincident, and lagging economic indicators) and generating the Consumer Confidence Index.

Business Cycle Indicators

The Conference Board assumed "custodial" oversight of the three key economic or business cycle indicators (leading, coincident, and lagging) from the Bureau of Economic Analysis of the U.S. Department of Commerce in 1995. Since that time, The Conference Board has had the responsibility of collecting monthly economic data, calculating the three indexes, and making this information available to the public.
  • Leading Economic Indicator: This is a composite of ten distinct economic measures that generally lead business-cycle movements by three to twelve months. This is the most widely publicized, and most useful, of the three business cycle indicators compiled by The Conference Board. The ten measures included in this composite index are: (1) manufacturers' new orders for consumer goods and materials, (2) an index of vendor performance, (3) manufacturers' new orders for nondefense capital goods, (4) the Standard & Poor's 500 index of stock prices, (5) new building permits for private housing, (6) the interest rate spread between U.S. Treasury bonds and Federal Funds, (7) the M2 real money supply, (8) average workweek in manufacturing, (9) an index of consumer expectations, and (10) average weekly initial claims for unemployment insurance.

  • Coincident Economic Indicator: This is a composite of four economic measures that rise and fall with current business-cycle conditions. The four coincident indicators that make up the composite index are: (1) the number of employees on nonagricultural payrolls, (2) industrial production, (3) real personal income (after subtracting transfer payments), and (4) real manufacturing and trade sales.

  • Lagging Economic Indicator: This is a composite of seven economic measures that generally lag business-cycle movements by three to twelve months. The seven lagging indicators included in the composite index are: (1) labor cost per unit of output in manufacturing, (2) the average prime interest rate, (3) the amount of outstanding commercial and industrial debt, (4) the Consumer Price Index for services, (5) consumer credit as a fraction of personal income, (6) the average duration of unemployment, and (7) the ratio of inventories to sales for manufacturing and trade.

Consumer Confidence Index

The Conference Board is also responsible for conducting a monthly survey on consumer confidence, which is then used to compile the Consumer Confidence Index. The Consumer Confidence Index is a key indicator of consumer attitudes, preferences, and expectations of future economic conditions.

The monthly Consumer Confidence Survey is conducted with a randomly selected, representative sample of 5,000 U.S. households. Each household is asked five simple questions dealing with:

  1. An appraisal of current business conditions.
  2. Expectations of business conditions in six months.
  3. An appraisal of current employment conditions.
  4. Expectations of employment conditions in six months.
  5. Expectations regarding total family income in six months.
Each question has three possible responses--positive, neutral, or negative. Separate measures are calculated for each question by dividing the proportion of households responding "positive" by the total proportion of those responding "positive" and "negative." The official Consumer Confidence Index is the average of all five questions, which is indexed based on values in 1985. Two other indices are also reported. A Present Situation Index is calculated based on the average of questions 1 and 3. An Expectations Index is calculated based on the average of questions 2, 4, and 5.

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Recommended Citation:

CONFERENCE BOARD, THE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2018. [Accessed: February 25, 2018].


Check Out These Related Terms...

     | business cycle indicators | leading economic indicators | coincident economic indicators | lagging economic indicators | National Bureau of Economic Research | Consumer Confidence Index | Index of Consumer Sentiment |


Or For A Little Background...

     | business cycles | expansion | contraction | business cycle phases | full employment | economic growth |


And For Further Study...

     | demand-driven business cycles | investment business cycles | political business cycles | stabilization policies | full employment | potential real gross domestic product | economic growth | political views |


Related Websites (Will Open in New Window)...

     | The Conference Board | National Bureau of Economic Research |


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