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If you understand the twists and turns of the U.S. economy, you may be either smarter than most of us or too confident. There's enough change every day, it seems, that one might never be certain if the economy is healthy or otherwise. We at The Daily Advertiser contacted some experts, B.I. Moody III College of Business faculty members Cary Heath and Mary Fox Luquette, to help us understand.

Question: We read seemingly contradictory reports about the economy: it's recovering, it's recovering too slowly, or it is not recovering at all. Overall, in your mind, is the U.S. economy improving at a healthy rate? Why or why not?
Answer: Economists usually define a recession as two consecutive quarters of negative economic growth. By that measure, the U.S. economy is technically no longer in a recession. But the current recovery is historically unique — in disturbing ways. First, and perhaps most troubling, is the fact that the labor force participation rate (the percentage of the working-age population working or looking for work) has declined. Historically, that number increases in recoveries. Also, the Fed has found it necessary to keep interest rates near zero, whereas interest rates have tended to rise during previous recoveries. Economists have considered growth rates of about 3 percent to be "healthy," but the new normal might be somewhat lower. Think Europe. — Cary Heath

Q: What are key indicators that the public should look for when weighing the health of the economy? Jobs? Retail sales? Durable goods? Or something else?
A: Some indicators describe the current state of the economy (concurrent indicators) while others can foretell recessions and recoveries (leading indicators). Concurrent indicators include employment data, GDP and corporate profits, among others. Leading indicators include stock prices, new orders for durable goods, the average workweek, building contracts and claims for unemployment insurance. Modern information technology makes all this data available to the public. Anyone with access to the internet can stay economically well informed. — Cary Heath

Q: How reliable are government reports about the economy? What reports do economists find most reliable?
A: Numerous government sources provide solid economic data, including the Federal Reserve, the Bureau of Labor Statistics and the Bureau of Economic Analysis, among others. Good economic statistics can be found in the annual Economic Report of the President (which, despite its name, is mostly devoid of political spin). Unfortunately, partisan politics adulterates many economic "reports." Economists try to stick with primary sources, such as those identified above, and rely less on secondary or "interpretative" reports. That said, serious readers will find honest reporting in a number of popular journals. The Economist and The Wall Street Journal are especially responsible and accurate. — Cary Heath

Q: Should consumers react in certain ways to changes in the economy: conservative in a downturn, spend in an upturn? Or should wise consumers act the same in all economies: Spend prudently, save enthusiastically, budget carefully?
A: The economy is always changing, so reacting to changes would be a never-ending process. Although acting in tandem with market conditions would seem advantageous, it would require the ability to time the beginning and ending of economic cycles. Even seasoned market watchers cannot continually do this. Saving aggressively and spending judiciously have always been the wise approach. If there is sufficient liquidity (enough cash on hand), then the economic conditions can be weathered without drastically affecting lifestyle. The best advice has always been to save for a rainy day. Since the days are more rainy lately than clear, people need to save twice as much. — Mary Fox Luquette

- From The Daily Advertiser, Oct. 7, 2014.

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