Economic Indicators

Economic Indicators and their Classification

Economic indicators (macroeconomic indicators) can be broadly classified into two categories – Growth and Inflation

What are Economic Indicators?

Macroeconomic indicators are statistics released by government agencies and the private sector that provide us with information on the state of the country’s economy. These indicators are generally classified as leading, lagging or coincident indicators depending on their ability to predict the economic state.  An example of a lagging macroeconomic indicator is the quarterly GDP figure released by the Bureau of Economic Analysis.

In this section we will not simply study each economic indicator. We will build the connections between the economic indicators, financial instrument price determinants and the central bank’s monetary policy.

We will make all these connections between economic entities, factors, markets and central bank policies through the use of our “Economic Map”. The economic map helps us to understand how each small sub-component aggregates to the larger components, which in turn aggregate to the Gross Domestic Product thus giving us a wider perspective of how entities interrelate with one another.


Why Study US Economic Indicators?

We look at indicator releases from the United States for the following reasons. The US government agencies, private entities and economists provides a vast amount of information on the US economy probably more than anywhere else in the world. The US economy is one of the largest in the world and the US financial markets are one of the world’s largest markets in terms of market capitalisation, and therefore the most keenly tracked by  traders worldwide.

Although in this course we study the indicators of the US markets and the actions of the Federal Reserve Bank, this same knowledge can be applied to any economy, financial market and central bank in any country. So you could be in India, China, Brazil, Canada—from any country—and the concepts that you will learn here are applicable to any economy.

The economic indicators we will study are:

  • The Quarterly GDP Report
  • Car Sales Report
  • Retail Sales Report
  • Personal Income and Outlays Report
  • Housing Starts
  • Durable Goods Orders
  • Factory Orders and Manufacturing Inventories
  • Construction Spending
  • Trade Balance Report
  • Purchasing Manager’s Index
  • Employment Situation Report
  • Industrial Production
  • Leading Economic Indicators
  • The Beige Book
  • Consumer Confidence Index
  • Consumer Credit Report
  • GDP Price Index
  • Consumer Price Index
  • Producer Price Index

By the end of this course, you will have all the tools necessary to start trading on fundamentals by “making the connections” between these economic indicators, financial markets and the central bank’s monetary policy.

Alternatively you could fast track your learning process by taking our courses.

Related Topics

Gross Domestic Product

Monetary Policy

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