are the monthly measure, which includes what we pay as consumers, as well as the price of raw materials for business and includes:
- Producer Prices
- Consumer Prices
- Prices Received And Paid By Farmers
This procyclical and coincidental barometer of inflation measures the rate of change in price levels. One of the hot buttons, which is being closely watched, is the price of oil and its relationship to these prices. The consequences of volatility and the accelerated rising prices are putting significant amounts of pressure on both consumers and businesses.
Money, Credit, and Security Markets
are provided weekly and monthly and show the volume of money in the economy, as well as interest rates at various levels and includes:
- Money Stock (M1, M2, and M3)
- Bank Credit at All Commercial Banks
- Consumer Credit
- Interest Rates and Bond Yields
- Stock Prices and Yields
The Federal Reserve Board sets interest rates to regulate the growth of the economy. Nominal interest rates are impacted by inflation and share the inflationary traits of being procyclical and coincidental indicators. In addition, overall stock market returns have demonstrated to be procyclical leading indicators of economic performance.
is an annual measure of government spending and government deficits and debts:
- Federal Receipts (Revenue)
- Federal Outlays (Expenses)
- Federal Debt
Typically, governments will attempt to boost the economy during downswings by increasing spending without raising taxes. This increase in deficit government spending tends to occur more during recessions. Today, the government finds itself in a vicious cycle trying to balance the need to maintain peace in areas of economic interest to the United States, and the high price to maintain that stability. In general, deficit spending tends to be countercyclical to the economy while coincidental to the business cycle. However, with todays mounting pressure to maintain this balance, I would use caution in using this indicator alone in strategic decision making.
measures how much the country is exporting and how much they are importing:
- Industrial Production and Consumer Prices of Major Industrial Countries
- U.S. International Trade in Goods and Services
- U.S. International Transactions
We live in a high consumer society which tends to spend more on domestics and imported products during economic upswings. Traditionally, export levels are steady during the business cycle. The figure most noted is the balance of trade (or net exports). When times are good, people tend to spend more money on both domestic and imported goods. In addition, the level of exports tends not to change much during the business cycle. As a result, the balance of trade is countercyclical as imports outpace exports during boom periods. Measures of international trade tend to be coincidental economic indicators.
In addition, based on my experience as an intelligence analyst, often international trade is used as a tool by politicians to leverage situations. More often than not, we are not privy to the bigger picture and only have economic data to rely on. When looking at these numbers, I would also suggest looking at the geopolitical situation and its bearing on trade as well.
In military intelligence, the volume, quality, and timeliness received greatly impacts the ongoing decision-making process. In economic intelligence, prioritizing the significance of data is just as important. Often deciphering the indicators is much like reading tea leaves; and, at best, it is as accurate as a seven-day outlook weather forecast. The fluid interaction of indicators with global and domestic events influences the economy at both the micro and macro levels. To gain insight into understanding economic indicators is both an art and a science; to be successful, one must take a holistic view of the world around them.