Index (economics)

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In statistics, economics, and finance, an index is a statistical measure of change in a representative group of individual data points. These data may be derived from any number of sources, including company performance, prices, productivity, and employment. Economic indices track economic health from different perspectives. Examples include the consumer price index, which measures changes in retail prices paid by consumers, and the cost-of-living index (COLI), which measures the relative cost of living over time.^[1]

Influential global financial indices such as the Global Dow, and the NASDAQ Composite track the performance of selected large and powerful companies in order to evaluate and predict economic trends. The Dow Jones Industrial Average and the S&P 500 primarily track U.S. markets, though some legacy international companies are included.^[2] The consumer price index tracks the variation in prices for different consumer goods and services over time in a constant geographical location and is integral to calculations used to adjust salaries, bond interest rates, and tax thresholds for inflation.

The GDP Deflator Index, or real GDP, measures the level of prices of all-new, domestically produced, final goods and services in an economy.^[3] Market performance indices include the labour market index/job index and proprietary stock market index investment instruments offered by brokerage houses.

Some indices display market variations.^{[definition needed]} For example, the Economist provides a Big Mac Index that expresses the adjusted cost of a globally ubiquitous Big Mac as a percentage over or under the cost of a Big Mac in the U.S. in USD.^[4] Such indices can be used to help forecast currency values.^{[citation needed]}