For many individuals with investments in the market and other securities, the state of the economy is critically important. But what economic data matters most? Where can I find it? What are the most credible sources? How often is the data released? Don’t worry; one of my goals in today’s article is to help you answer these questions!
The Conference Board’s LEI
The Conference Board is a non-profit organization that provides trusted insights and economic data to help businesses and investors make informed decisions. They release the “Conference Board’s Leading Economic Index (LEI)” monthly, typically around the third week of the month.
The Conference Board’s LEI predicts future economic activity by combining ten key indicators. A rising LEI suggests economic growth, while a falling LEI signals potential downturns. The LEI factors average weekly hours (manufacturing), initial unemployment claims, new orders for consumer goods and nondefense capital goods (excluding aircraft), ISM® new orders, building permits, stock prices, the Leading Credit Index™, the interest rate spread, and average consumer expectations for business conditions.
You can find the summary and detailed reports of The Conference Board’s Leading Economic Index (LEI) on their LEI page. This page includes the latest press releases and comprehensive reports that provide insights into the economic outlook. By monitoring the Conference Board’s Leading Economic Index (LEI), investors can anticipate economic trends and adjust their strategies accordingly.
For example, when the LEI is up, it suggests economic growth, and investors might favor cyclical industries like consumer discretionary and technology, which tend to perform well during expansions. Conversely, when the LEI is down, indicating a potential downturn, investors might shift to defensive stocks like utilities and consumer staples, which are more resilient during economic contractions.
Federal Reserve Economic Data (FRED)
FRED is an online database from the Federal Reserve Bank of St. Louis that provides access to a vast array of economic data. FRED releases data at various frequencies, including daily, weekly, monthly, quarterly, and annually. You can find the release schedule and detailed information on FRED’s Economic Release Calendar.
FRED provides insights into interest rates, inflation, and employment, helping investors understand economic trends. For example, during periods of high unemployment and recessionary cycles, bonds generally perform better as investors seek safer investments, while stocks often perform worse due to reduced consumer spending and lower corporate earnings.
Bureau of Labor Statistics (BLS)
The BLS is a U.S. government agency that collects and shares data about the economy, including employment, inflation (CPI), and the Producer Price Index (PPI). The Jobs Report, CPI, and PPI are all released monthly, with the Employment Report typically on the first Friday, the CPI around mid-month, and the PPI usually in the second week.
This data gives a snapshot of the job market, showing how many people are working or unemployed. It also tracks price changes for consumers (CPI) and businesses (PPI), which helps indicate inflation trends. Together, these data points give clues about the overall health of the economy.
By keeping an eye on the BLS data, the average investor can gauge the health of the job market and inflation trends. For example, if inflation is up, historical trends show that stocks and bonds tend to perform worse, while commodities and real estate often outperform. This information can help investors make more informed decisions about adjusting their portfolios to mitigate risks or capitalize on growth opportunities.
Putting it all together
Staying current on the state of the economy can help us be prepared for whatever lies ahead. At Whitaker-Myers Wealth Managers, we understand not everyone has time to comb through dozens of pages of economic research. That is why our team of financial advisors uses these tools to help you reach your financial goals. Reach out to one of our advisors today; by doing so, you can gain insight into expectations for the economy, build a financial plan, or make changes to an existing one!
The Investor’s Guide to Navigating Economic Data: Key Reports You Can’t Ignore
December 19, 2024
Joseph Browning
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