Index (economics)

In economics, statistics, and finance, an index is a number that measures how a group of related data points—like prices, company performance, productivity, or employment—changes over time to track different aspects of economic health from various sources.

Consumer-focused indices include the Consumer Price Index (CPI), which shows how retail prices for goods and services shift in a fixed area, aiding adjustments to salaries, bond interest rates, and tax thresholds for inflation. The cost-of-living index (COLI) compares living expenses over time or across places.^[1] The Economist’s Big Mac Index uses a Big Mac’s cost to explore currency values and purchasing power.^[2]

Market performance indices track trends like company value or employment. Stock market indices include the Dow Jones Industrial Average and S&P 500, which primarily cover U.S. firms.^[3] The Global Dow and NASDAQ Composite monitor major companies worldwide. Commodity indices track goods like oil or gold. Bond indices follow debt markets. Proprietary stock market index tools from brokerage houses offer specialized investment measures. Economy-wide, the GDP deflator, or real GDP, gauges price changes for all new, domestically produced goods and services.^[4]