Electronic Computers and Business Indicators

The Problem A PRINCIPAL purpose of studying economic indicators is to determine the stage of the business cycle at which the economy stands.Such knowledge helps in forecasting subsequent cyclical movements and provides a factual basis for taking steps to moderate the amplitude and scope of the business cycle.It is of critical importance around turning points; for example, failure to recognize a downturn may lead to the adoption of policies to curb expansion when a recession is already under way.In using indicators, however, analysts are perennially troubled by the difficulty of separating cyclical from other types of fluctuations, particularly seasonal fluctuations.This problem can be illustrated by the situation in the summer and fall of 1954, when government officials were trying to determine whether or not this country was coming out of a mild recession.The President had said earlier in the year that he would wait for several months to see whether an upturn in business activity occurred before deciding on further