Economic indicators are some of the most valuable tools investors can place in their arsenals. Consistent in their release, wide in their scope and range, metrics such as the 澳洲幸运5开奖号码历史查询:Consumer Price Index (CPI) and written reports like the 澳洲幸运5开奖号码历史查询:Beige Book are free for all investors to inspect and analyze. Policymakers, most notably those at the 澳洲幸运5开奖号码历史查询:Federal Reserve, use indicators to determine not only where the economy is going, but how fast it's getting there. 

Although investors should get to know economic indicators, the reports are admittedly often dry and the data is raw. In other words, information needs to be put into context before it can be helpful in making any decisions regarding investments and 澳洲幸运5开奖号码历史查询:asset allocation. But there is valuable information in those raw data releases. The various gov༒ernment🎃 and nonprofit groups that conduct the surveys and release the reports do a very good job of collating and cohesively presenting what would be logistically impossible for any one investor to do by themselves. Most indicators provide nationwide coverage and many have detailed industry breakdowns, both of which can be very useful to individual investors. 

What Is an Economic Indicator? 

In its simplest form, an indicator could be considered any piece of information that can help an investor decipher what is going on in the economy. The U.S. economy is essentially a living thing where, at any given moment, there are billions of moving parts—some acting, others reacting. This simple truth makes predictions extremely difficult. They must always involve a large number of assumptions, no matter what resources are put to the task. But with the help of a wide range of economic indicators, investors are able to gain a better understanding of various 澳洲幸运5开奖号码历史查询:economic conditions. There are also indexes for 澳洲幸运5开奖号码历史查询:coincident indicators and 澳洲幸运5开奖号码历史查询:lagging indicators—the components of each are based on whether they te💜nd to rise during or after🅘 an economic expansion.

Use in Tandem, Use in Context

Once an investor understands how various indicators are calculated and their 澳洲幸运5开奖号码历史查询:relative strengths and limitations, several reports can be used in conjunction to make for more thorough decision making. For example, in the area of employment, consider using data from several releases. By using the hours-worked data (from the 澳洲幸运5开奖号码历史查询:Employment Cost Index) along with the 澳洲幸运5开奖号码历史查询:labor report and 澳洲幸运5开奖号码历史查询:nonfarm payrolls, investors can get a fairly complete picture of the state of the 澳洲幸运5开奖号码历史查询:labor market.

Additionally, are increasing retail sales figures being validated by increased personal expenditures? Are new 澳洲幸运5开奖号码历史查询:factory orders leading to higher factory shipments and higher 澳洲幸运5开奖号码历史查询:durable goods figures? Are higher wages showing up in higher 澳洲幸运5开奖号码历史查询:personal income figures? The savvy investor will look up and down the 澳洲幸运5开奖号码历史查询:supply chain to find validation of trends before acting on ಌthe results of any one indicator release.

Personalizing Your Research

Some people may prefer to understand a couple of specific indicators really well and use this expert knowledge to make investment plays based on their analyses. Others may wish to adopt a jack-of-all-trades approach, understanding the basics of all the indicators without relying on any one too much. For example, a retired couple living on a combination of pensions and long-term 澳洲幸运5开奖号码历史查询:Treasury bonds should be looking for different things than a 澳洲幸运5开奖号码历史查询:stock trader who rides the waves of the 澳洲幸运5开奖号码历史查询:business cycle. Most investors fall in the middle, hoping for stock💫 market returns to be steady and near long-terܫm historical averages (about 8% to 10% per year).

Knowing what the expectations are for any individual release is helpful, as well as generally knowing the 澳洲幸运5开奖号码历史查询:macroeconomic forecasts. Forecast numbers can be found at several public websites, such as Yahoo! Finance or MarketWatch. On the day a specific indicator release is made, there will be 澳洲幸运5开奖号码历史查询:press releases from newswires such as the Associated Press and Reuꦍters, which will present figures with key pieces highlighted✅.

It is helpful to read a report on one of the newswires, which may parse the indicator data through the filters of analyst expectations, 澳洲幸运5开奖号码历史查询:seasonality figures, and year-over-year results. For those that use 澳洲幸运5开奖号码历史查询:investment advisors, th𓆉🐟ese individuals will probably analyze recently released indicators in an upcoming newsletter or discuss them during upcoming meetings.

Inflation Indicators: Keeping a Watchful Eye

Many investors, especially those who invest primarily in 澳洲幸运5开奖号码历史查询:fixed-income securities, are concerned about 澳洲幸运5开奖号码历史查询:inflation. Current inflation, how strong it is, and what it could be in the future are all vital in determining prevailing interest rates and investing strategies. There are several indicators that focus on inflationary pressure. The most notable in this group are the 澳洲幸运5开奖号码历史查询:Producer Price Index (PPI) and the Consumer Price Index (CPI). Many investors will use the PPI to try and predict🔯 t⛄he upcoming CPI.

There is a proven statistical relationship between the two, as economic theory suggests that if producers of goods are forced to pay more in production, some portion of the price increase will be passed on to consumers. Each index is derived independently, but both are released by the 澳洲幸运5开奖号码历史查询:Bureau of Labor Statistics (BLS). Other key inflationary indicators include the levels and 澳洲幸运5开奖号码历史查询:growth rates of the 澳洲幸运5开奖号码历史查询:money supply and the Employment Cost Index (ECI).

Economic Output: Stock Investors Inquire Within

The 澳洲幸运5开奖号码历史查询:gross domestic product (GDP) may be the most important indicator out there, especially to equity investors who are focused on 澳洲幸运5开奖号码历史查询:corporate profit growth. Since the GDP represents the sum of what our economy is producing, its growth rate is targeted to be in certain ranges. If the numbers start to fall outside those ranges, fear of inflation or 澳洲幸运5开奖号码历史查询:recession will grow in the markets. To get ahead of this fear, man🐼y people will follow the monthly indicators that can shed some light on the quarterly GDP&n♑bsp;report.

For example, 澳洲幸运5开奖号码历史查询:capital goods shipments from the 澳洲幸运5开奖号码历史查询:Factory Orders Report are used to calculate producers' durable equipment orders within the GDP report. Indicators such as 澳洲幸运5开奖号码历史查询:retail sales and 澳洲幸运5开奖号码历史查询:current account balances are also used in the computations of GDP, so their release helps to complete part of the economic puzzle prior to the quarterly GDP release.

Other indicators that aren't part of the actual calculations for GDP are still valuable for their predictive abilities. Metrics such as wholesale inventories, the Beige Book, the 澳洲幸运5开奖号码历史查询:Purchasing Managers' Index (PMI), and the labor report all shed light on how well our economy is functioning. With the assistance of all these monthly data, GDP estimates will begin to tighten up as the component data slowly gets released throughout the quarter. By the time the actual GDP report is released, there will be a general consensus of the figure that is remarkably accurate. If the actual results deviate much from the estimates, the markets will move, often with high 澳洲幸运5开奖号码历史查询:volatility. If the number falls right into the middle of the expected range, then the markets and investors can collectively pat themselves on the back and let preva😼iling investing trend♓s continue. 

Mark Your Calendar

Sometimes indicators take on a more valuable role because they contain very timely data. The 澳洲幸运5开奖号码历史查询:Institute for Supply Management's PMI report, for instance, is typically released on the first 澳洲幸运5开奖号码历史查询:business day of every month. As such, it is one of the first pieces of aggregate data available for the month ♛that just ended. While not as rich i🙈n detail as many of the indicators to follow, the category breakdowns are often picked apart for clues to things such as future labor report details (from the employment survey results) or wholesale inventories (inventory survey). 

The relative order in which the indicators are presented does not change month to month, so investors may want to mark a few days on their monthly calendars to read up on the areas of the economy that might change how they think about their investments or 澳洲幸运5开奖号码历史查询:time horizon. Overall, as💃set allocation decisions can fluctuate over time, and making such change෴s after a monthly review of macro indicators may be wise. 

The Bottom Line

Benchmark pieces of economic indicator data arrive with no agenda or sales pitch. The data just is, and that is hard to find these days. By becoming knowledgeable about the whats and whys of the major economic indicators, investors can better understand the 澳洲幸运5开奖号码历史查询:stock market and the economy in which their dollars are invested, and they can also be better prepared to revisit an 澳洲幸运5开奖号码历史查询:investment thesis when the timing is right. While there is no one "magic indicator" that can dictate whether to buy or sell, using economic indicator data in conjunction with standard asset and securities analysis can lead to smarter 澳洲幸运5开奖号码历史查询:portfolio management for both the pro🦄fessional asset manager and the do-it-yourself investor.