Understanding Economic IndicatorsUnderstanding Economic Indicators
Background Economic Theme: Recognize the stage of Background Economic Theme: Recognize the stage of
the business cycle.the business cycle.
-200
-100
0
100
200
300
8000
8400
8800
9200
9600
10000
10400
10800
96 97 98 99 00 01 02 03 04
USAGDP Trend Cycle
Hodrick-Prescott Filter (lambda=1600)
Cycle of the IndicatorCycle of the Indicator
Leading indicator: used to predict changes in the Leading indicator: used to predict changes in the economy. Its trajectory changes before the economy economy. Its trajectory changes before the economy follows a particular pattern. i.e. Conference Board LIfollows a particular pattern. i.e. Conference Board LI
Coincident indicator: varies simultaneously with the Coincident indicator: varies simultaneously with the business cycle. It indicates current economic business cycle. It indicates current economic conditions. i.e. industrial production conditions. i.e. industrial production
Lagged indicator: follows the business cycle with Lagged indicator: follows the business cycle with lags. It illustrates where the economy has been. i.e. lags. It illustrates where the economy has been. i.e. corporate profitscorporate profits
Nominal vs RealNominal vs Real
100000
200000
300000
400000
500000
600000
700000
800000
900000
1000000
95 96 97 98 99 00 01 02 03 04
M1 Nominal
3000
4000
5000
6000
7000
8000
9000
94 95 96 97 98 99 00 01 02 03 04
M1 Real
Adjusted vs Non-adjustedAdjusted vs Non-adjusted
1200000
1300000
1400000
1500000
1600000
1700000
1800000
96 97 98 99 00 01 02 03 04
Adjusted Original
Growth RatesGrowth Rates
-.004
.000
.004
.008
.012
.016
.020
96 97 98 99 00 01 02 03 04
GDP Quarterly Change
.00
.01
.02
.03
.04
.05
.06
96 97 98 99 00 01 02 03 04
GDP Year to Year Change
GDPGDP
Published by: Bureau of Economic Published by: Bureau of Economic Analysis (BEA)Analysis (BEA)
Frequency: QuarterlyFrequency: Quarterly Period Covered: Prior quarterPeriod Covered: Prior quarter Market significance: HighMarket significance: High
Best measure of economic activityBest measure of economic activity Economic Economic Indicators.govIndicators.gov
Personal Income and SpendingPersonal Income and Spending
Published by: BEAPublished by: BEA Frequency: monthlyFrequency: monthly Period Covered: prior month Period Covered: prior month Market significance: Moderate Market significance: Moderate
Accounts for about 2/3 of real GDP but Accounts for about 2/3 of real GDP but undergoes frequent revisionsundergoes frequent revisions
Economic Indicators.govEconomic Indicators.gov
Car and Truck SalesCar and Truck Sales
Published by: Motor Vehicle Published by: Motor Vehicle Manufacturers and ImportersManufacturers and Importers
Frequency: MonthlyFrequency: Monthly Period Covered: Prior monthPeriod Covered: Prior month Market significance: moderateMarket significance: moderate
Leading indicator of economic activity. Leading indicator of economic activity. Undergoes revisions. Undergoes revisions.
Retail SalesRetail Sales
Published by: Bureau of the CensusPublished by: Bureau of the Census Frequency: MonthlyFrequency: Monthly Period Covered: Prior monthPeriod Covered: Prior month Market significance: HighMarket significance: High
First indicator of consumer activityFirst indicator of consumer activity Latest Advance Monthly Sales for Retail Latest Advance Monthly Sales for Retail
and Food Servicesand Food Services
Home SalesHome Sales
Published by: Bureau of the CensusPublished by: Bureau of the Census Frequency: monthlyFrequency: monthly Period Covered: prior month Period Covered: prior month Market significance: moderateMarket significance: moderate
Leading indicator of economic activity. High Leading indicator of economic activity. High volatility. volatility.
http://www.census.gov/cgi-bin/briefroom/http://www.census.gov/cgi-bin/briefroom/BriefRmBriefRm
Consumer CreditConsumer Credit
Published by: Federal Reserve BoardPublished by: Federal Reserve Board Frequency: monthlyFrequency: monthly Period Covered: two prior months Period Covered: two prior months Market significance: moderateMarket significance: moderate
Indicator of the financial health of consumers. Indicator of the financial health of consumers. But comes in late. But comes in late.
Consumer Confidence MeasuresConsumer Confidence Measures
Published by: University of Michigan, the Published by: University of Michigan, the Conference Board, and ABC News. Conference Board, and ABC News.
Frequency: monthlyFrequency: monthly Period Covered: variesPeriod Covered: varies Market significance: moderateMarket significance: moderate
Leading indicator of consumer spending. Leading indicator of consumer spending. http://www.conference-board.org/economics/http://www.conference-board.org/economics/
ConsumerConfidence.cfmConsumerConfidence.cfm
ISM Manufacturing SurveyISM Manufacturing Survey
Published by: Institute for Supply Published by: Institute for Supply Management (ISM)Management (ISM)
Frequency: MonthlyFrequency: Monthly Period Covered: Prior monthPeriod Covered: Prior month Market significance: Very highMarket significance: Very high
First report on industrial activity. First report on industrial activity. http://www.ism.ws/ISMReport/MfgROB.cfm?http://www.ism.ws/ISMReport/MfgROB.cfm?
navItemNumber=12942navItemNumber=12942
Industrial Production and Capacity Industrial Production and Capacity UtilizationUtilization
Published by: Board of Governors of the Published by: Board of Governors of the Federal Reserve SystemFederal Reserve System
Frequency: monthlyFrequency: monthly Period Covered: prior monthPeriod Covered: prior month Market significance: moderateMarket significance: moderate
Good forecast of business cycle. Good forecast of business cycle.
Housing Starts/Building PermitsHousing Starts/Building Permits
Published by: Bureau of the CensusPublished by: Bureau of the Census Frequency: monthlyFrequency: monthly Period Covered: prior monthPeriod Covered: prior month Market significance: moderateMarket significance: moderate
Good predictor of business cycle. Good predictor of business cycle. Subject to revisions. Subject to revisions.
Durable Goods OrdersDurable Goods Orders
Published by: Bureau of the CensusPublished by: Bureau of the Census Frequency: monthlyFrequency: monthly Period Covered: prior month Period Covered: prior month Market significance: highMarket significance: high
Key indicator on future manufacturing. Key indicator on future manufacturing.
Construction ExpendituresConstruction Expenditures
Published by: Bureau of the CensusPublished by: Bureau of the Census Frequency: monthlyFrequency: monthly Period Covered: prior month Period Covered: prior month Market significance: lowMarket significance: low
Good coverage. But late and with major Good coverage. But late and with major revisionsrevisions
http://www.census.gov/const/C30/http://www.census.gov/const/C30/release.pdfrelease.pdf
Business Inventories and SalesBusiness Inventories and Sales
Published by: Bureau of the CensusPublished by: Bureau of the Census Frequency: monthlyFrequency: monthly Period Covered: two prior months Period Covered: two prior months Market significance: lowMarket significance: low
Inventories affect the pace of future industrial Inventories affect the pace of future industrial activity. But report comes in late. activity. But report comes in late.
Factory Orders and Manufacturing Factory Orders and Manufacturing InventoriesInventories
Published by: Bureau of the CensusPublished by: Bureau of the Census Frequency: monthlyFrequency: monthly Period Covered: two prior months Period Covered: two prior months Market significance: lowMarket significance: low
Overlapping information with the Advanced Overlapping information with the Advanced Report on Durable GoodsReport on Durable Goods
Productivity and CostsProductivity and Costs
Published by: BEAPublished by: BEA Frequency: quarterlyFrequency: quarterly Period Covered: prior quarter Period Covered: prior quarter Market significance: moderateMarket significance: moderate
Useful information about inflation, Useful information about inflation, however, it is subject to substantial however, it is subject to substantial revisions. revisions.
Federal BudgetFederal Budget
Published by: Treasury DepartmentPublished by: Treasury Department Frequency: monthlyFrequency: monthly Period Covered: prior month Period Covered: prior month Market significance: lowMarket significance: low
Merchandise Trade BalanceMerchandise Trade Balance
Published by: Bureau of the CensusPublished by: Bureau of the Census Frequency: monthlyFrequency: monthly Period Covered: two prior months Period Covered: two prior months Market significance: moderateMarket significance: moderate http://www.census.gov/foreign-trade/http://www.census.gov/foreign-trade/
Press-Release/current_press_release/Press-Release/current_press_release/ft900.pdfft900.pdf
Current Account BalanceCurrent Account Balance
Published by: BEAPublished by: BEA Frequency: QuarterlyFrequency: Quarterly Period Covered: Previous quarter Period Covered: Previous quarter Market significance: moderateMarket significance: moderate
Foreign Industrial ProductionsForeign Industrial Productions Japan Industrial ProductionJapan Industrial Production
• Published by: Ministry of Economy, Trade and Industry, Published by: Ministry of Economy, Trade and Industry, JapanJapan
• Frequency: MonthlyFrequency: Monthly• Period covered: Previous monthPeriod covered: Previous month
China Industrial ProductionChina Industrial Production• Published by: National Bureau of Statistics of ChinaPublished by: National Bureau of Statistics of China• Frequency: MonthlyFrequency: Monthly• Period covered: Previous monthPeriod covered: Previous month
German Industrial ProductionGerman Industrial Production• Published by: Federal Statistics Office, GermanyPublished by: Federal Statistics Office, Germany• Frequency: MonthlyFrequency: Monthly• Period covered: Previous monthPeriod covered: Previous month
Global Manufacturing Purchasing Global Manufacturing Purchasing Managers IndexManagers Index
Published by: JP MorganPublished by: JP Morgan Frequency: monthlyFrequency: monthly Period Covered: prior month Period Covered: prior month Market significance: moderateMarket significance: moderate http://www.ism.ws/ISMReport/http://www.ism.ws/ISMReport/
content.cfm?ItemNumber=17719content.cfm?ItemNumber=17719
OECD Composite Leading OECD Composite Leading IndicatorsIndicators
Published by: OECDPublished by: OECD Frequency: monthlyFrequency: monthly Period Covered: prior month Period Covered: prior month Market significance: moderateMarket significance: moderate
Employment Employment (payroll employment and unemployment rate)(payroll employment and unemployment rate)
Published by: Bureau of Labor Statistics Published by: Bureau of Labor Statistics (BLS) (BLS)
Frequency: MonthlyFrequency: Monthly Period Covered: prior monthPeriod Covered: prior month Market significance: very highMarket significance: very high
First complete look at economic activity. First complete look at economic activity. http://stats.bls.gov/news.release/pdf/http://stats.bls.gov/news.release/pdf/
empsit.pdfempsit.pdf
Employment Cost IndexEmployment Cost Index
Published by: BLSPublished by: BLS Frequency: quarterly Frequency: quarterly Period Covered: prior quarter Period Covered: prior quarter Market significance: moderateMarket significance: moderate
Comprehensive measure of labor cost. But published Comprehensive measure of labor cost. But published only quarterly. only quarterly.
Unemployment Insurance ClaimsUnemployment Insurance Claims
Published by: U.S. Department of Labor Published by: U.S. Department of Labor Frequency: weeklyFrequency: weekly Period Covered: prior week Period Covered: prior week Market significance: moderateMarket significance: moderate
Accurate in gauging labor market conditions. Accurate in gauging labor market conditions.
Producer Price IndexProducer Price Index
Published by: BLSPublished by: BLS Frequency: monthlyFrequency: monthly Period Covered: prior monthPeriod Covered: prior month Market significance: highMarket significance: high
Good measure of inflation. Good measure of inflation.
Consumer Price IndexConsumer Price Index
Published by: BLSPublished by: BLS Frequency: monthlyFrequency: monthly Period Covered: prior month Period Covered: prior month Market significance: highMarket significance: high
Key measure of inflationKey measure of inflation http://stats.bls.gov/news.release/pdf/http://stats.bls.gov/news.release/pdf/
cpi.pdfcpi.pdf