ECONOMIC INDICATORSECONOMIC INDICATORS

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

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8000

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9600

10000

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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

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95 96 97 98 99 00 01 02 03 04

M1 Nominal

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94 95 96 97 98 99 00 01 02 03 04

M1 Real

Adjusted vs Non-adjustedAdjusted vs Non-adjusted

1200000

1300000

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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

Indicators by Sector of Economic Indicators by Sector of Economic ActivityActivity

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

Consumer SpendingConsumer Spending

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

Industrial ActivityIndustrial Activity

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.

Government SpendingGovernment Spending

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

Foreign SectorForeign Sector

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

Labor MarketLabor Market

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.

InflationInflation

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

Specialized IndicatorsSpecialized Indicators

Cyclical IndicatorsCyclical Indicators

Published by: BEA/The Conference BoardPublished by: BEA/The Conference Board Frequency: monthlyFrequency: monthly Period Covered: prior month Period Covered: prior month Market significance: moderateMarket significance: moderate