The Secrets of Economic Indicators (edit title/settings)

Ridiculously Simplified Synopsis edit

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Quotes edit see section history

• “There is too much economic information out there, and not all of it is useful”

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• Both the number of self-employed and those working for small start-up firms tend to increase at a faster rate than the rest of the labor market in the early stages of a recovery. Thus, as a recession nears its end, keep an eye on household employment; it may start to climb well before the payroll statistics do.

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• During recessionary periods, indicators that grab the headlines are housing starts, auto sales, and the major stock indexes, because they often provide the earliest clues that an economic recovery is imminent. Once business activity is in full swing, inflation measures like the CPI take center stage again, while the other indicators recede a bit into the background.

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• If you want to get a preview of the economy's direction, follow the changes in average hours worked in a week. It correlates very closely with overall output (GDP) and also changes in personal income.

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• Because labor is the single largest expense for companies, layoffs are now occurring months before the onset of a recession.

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• Weekly manufacturing overtime normally fluctuates within a narrow range of between 4 and 5 hours. If it slips below 4 hours a week for a few months, layoffs might increase. A consistent reading above 4.5 overtime hours presages new hiring.

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• Nearly half the earnings of S&P 500 firms come from business generated outside the U.S. More than 22 million American workers—nearly two in 10 jobs—are linked to foreign trade. One out of every four dollars generated in the U.S. economy is based on trade.

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• When average weekly manufacturing hours dips below 41, it's often an indication that the economy is struggling, while 41.5 hours and above suggests that business activity is moving into higher gear.

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• The only groups excluded from the establishment survey are farm workers, the self-employed, and domestic help.

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• The change in the number of non-farm jobs created includes positions in government. To find out what is happening in the private business sector, one has to subtract the government's contribution from total non-farm payroll.

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• Nominal dollars simply reflects the present value of goods and services exchanged in the marketplace. However, real dollars tells you the true value of goods and services produced or sold, because it strips out the effects of inflation.

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Setting & Locations edit see section history

• China
• India
• Germany
• Japan
• Europe
• America
• Brazil
• Chicago
• France
• New York
• Spain
• Italy
• Netherlands
• Austria
• Washington
• Greece
• Portugal
• Luxembourg
• Ireland
• Asia
• Belgium
• Canada
• Finland
• Beige Book
• Slovenia
• United States
• Malta
• Kansas City

First Sentence edit see section history

Authors & Contributors edit see section history

1. Bernard Baumohl (Author)

Classification edit see section history

• Library of Congress: Add the Library of Congress Classification.
• Dewey: 330.0112

Subjects edit see section history

• Books › Business & Investing › Economics › Macroeconomics
• Books › Business & Investing › Investing › Introduction
• Books › Business & Investing › Management & Leadership › Planning & Forecasting
• Books › Business & Investing › Management & Leadership › Strategy & Competition
• Books › Business & Investing › Popular Economics
• Books › Business & Investing › Personal Finance