Using Economic Indicators to Improve Investment Analysis

Successful trading and speculating, profitable investing, proper policymaking, and effective buying require a thorough grasp of the available data. This includes a healthy dose of skepticism for the information in published reports and a constant eye for aberrations in the established trend.

This book explains the relevant details of economic indicators reported by public and private agencies. By the end, you will be able to determine whether the reported data are reliable at face value or need deeper analysis before assessing their role in the current economic environment.

The goal of this book is not to transform you into a full-time economist, but to apprise you of the factors and statistical series that economists monitor in assessing current economic conditions. The reported economic series will have the same meaning whether you are making investment decisions for your household or for your firm. However, the strategy that bond traders take in following the economic statistics is likely to be different from the strategy followed by manufacturing executives or by consumers in their financial investments. In all cases, investors (bond traders, manufacturers, or consumers) or government policymakers must understand the reported economic indicator to make rational decisions. Cycles, Markets, and Participants 1

National Income and Product Accounts 

The Consumer Sector 

Investment Spending 

The Foreign Sector 

The Government Sector 

Inflation 

The Labor Market 175

 

Other Measures of Production 201

 

The Federal Reserve System 

 

The Treasury 

 

Making Strategic Investment Decisions 

 

Sources of Information 

 

Economic Indicator Releases by Statistical Agency