Macroeconomic Indicators

Macroeconomic indicators are statistics that indicate the current status of the economy of a state depending on a particular area of the economy (industry, labor market, trade, etc.). They are published regularly at a certain time by governmental agencies and the private sector.

The main point is to get a grasp into the relationship between the macroeconomy and financial markets and the value of equities. Before analyzing individual stocks, it is important to understand the strength and resiliency of the economy. For instance, if macroeconomic indicators suggest that economic growth is contracting and prices do not fully reflect the slowing economy impact on profits, a portfolio cash position should be increased or sector rotation may be considered. Indeed, the results of a macro analysis are employed to identify the current stage of the business cycle for the reason research shows that stocks tend to lead the economy by approximately six to nine months on average.

Most indicators are available for free from the Federal Reserve Economic Data (FRED) database. The Conference Board indicators can be grouped depending on their forecast type:

Leading Indicators thought to change in advance of economic conditions and used for forecasting the future strength and direction of the business cycle.
Coincident indicators thought to change in sync with economic conditions and used for interpreting current economic strength or weakness.
Lagging indicators thought to change after changes in economic conditions and used for corroborating that the economy has been expanding or contracting in accordance with already formed expectations.

The Manufacturing ISM Report

The Manufacturing ISM Report is a survey report based on data provided by supply executives showing the percentage reporting each response, the net difference (positive or negative), and the diffusion index.

Relevant Posts and Pages

Oil or Turmoil?

By Roberto | August 8, 2022

The economics of crude oil pricing is one of the most complex and variable mechanisms in the commodities market; indeed, as a depleting non-renewable resource, its cost of extraction depends not only on the current rate of production but also on the amount of cumulative production. In this sense, the low-carbon transition is driving rapid change across global energy systems.

The 2021 Recovery

By Roberto | November 12, 2020

From the Balance of Payment it is possible to understand the amount and direction of the net capital inflow (or outflow). Indeed, making an educated guess on the new locations for investment and trade may make the difference in investing after the epidemic.

Macro Indicators in the Aftermath

By Roberto | November 9, 2020

The current status of the economy of the US is relevant for many other countries; thus, it is important to understand the strength and resiliency of its economy.

The Geopolitics of Currencies

By Roberto | September 23, 2020

The 1944 Bretton Woods agreement jumpstarted the dollar into its reserve currency status. While economists proposed global trust and confidence in the US ability to pay its obligations, a more compelling justitification has its roots in United States’ political influence.

Assessing the Impact of Modern Monetary Policy on Citizens and Small Businesses

By Roberto | August 16, 2020

With respect to the COVID-19 impact, it has not passed unobserved that the $3.3 trillion issuance of debt securities in the first half of 2020 has been purchased only by the U.S. Federal Reserve (46%) and national/international private investors (40%); instead, foreign central banks, already holding trillions of dollars of U.S. Treasuries, did not acquire a significant amount. In other terms, it seems the U.S. is substantially moving to own its debt in what we can define a Japanese way of managing the economy; probably, other developed countries will soon engage in similar practices.

Entering Recession with Covid-19 and Deflation

By Roberto | March 11, 2020

Epidemic models may help in assessing the impact of COVID-19 on the economy as well as to understand the market’s interpretation of the virus impact. In this respect, Shiller’s narrative economics may provide insights with wider practical implications than behavioral economics.