How do we diaganose the health of US economy nowadays? The best way is to study the macroeconomic indicators.
Macroeconomic indicator is a statistic that indicates the current status of the economy from three major aspects: production and sale, inflation and employment. Macroeconomic indicators are published regularly at a specific time yearly. By observing the movement of indicators, we can understand the volatility of whole economy and possibly predict the future performance.
The followings are major US indicators with high impact on economy,
1. Chicago PMI index
It is the index of industrial enterprises of the Chicago region. The indicator represents the results of a survey of purchasing managers in the industry of Chicago and the status of production orders, prices of products and inventories in warehouses.
Publication: last business day of the month at 10:00 AM (EST) ; Source: The National Association of Purchasing Management – Chicago (NAPM) ; Web: www.napm-chicago.net/home; Web site of publication: www.kingbiz.com/library.asp
2. Consumer price index (CPI)
It represents changes in the level of retail prices for the basic consumer basket. This is the main indicator of inflation.
Publication: in the middle of the month at 8:30 AM (EST). Source: Bureau of Labor Statistics, Department of Labor (US); Web: www.bls.gov/cpi/
3. Durable goods orders
The indicator is based on a monthly review of 5000 manufacturers, including statistics on production orders of durable goods. Durable goods include products with a lifetime of more than three years, such as cars, furniture, etc. The growth of this indicator is a positive factor for economic development and leads to an increase in the national currency.
Publication: the fourth week of the month at 8:30 AM (EST); Source: U.S. Census Bureau; Web: www.census.gov/indicator/www/m3/adv/
4. Federal budget
It characterizes the ratio between income and expenditure of the state. When the level of government income is more than expenditures, then there is surplus. If the level of the state spending is more than its income, then there is a negative balance (deficit). This rate has a negligible impact on the market. Usually it is used for a long-term economic analysis and forecast of the exchange rate of the currency.
Publication: around the 20th of each month at 2:00 PM(EST). Source: Treasury Financial Management Service; Web: www.fms.treas.gov/mts/index.html
5. Gross domestic product (GDP)
It is the main indicator that reflects the state of the national economy. According to the Keynesian model of economic development, GDP can be represented as the following: GDP = C + I + S + (E – M), where C – consumption, I – investment, S – public expenditure, E – Exports, M – imports. It has a significant impact on the market.
Publication: quarterly at 8:30 AM (EST), around the 20th of the month. Source: U.S. Bureau of Economic Analysis; Web: www.bea.gov/national/index.htm#gdp
6. GDP deflator
The GDP deflator is an analogue of the consumer price index (CPI) and shows a change in the price levels of all goods belonging to GDP. Deflator is an aggregate price index aimed at elimination of price impacts and determination of dynamics of the physical volume of the combined value indicators: GDP as a whole, GDP by economic sectors, GDP by end-use areas, GDP of total income of the state and specific social groups.
Publication: quarterly at 8:30 AM (EST), around the 20th of the month. Source: The Bureau of Labor Statistics; Web: www.stats.bls.gov
7. ISM index (Institute of Supply Management index)
This index is used to assess changes in new industrial orders, industrial production, employment and the work speed of suppliers. The growth of the index results in an increase in USD.
Publication: first business day of the month at 10:00 AM (EST). Source: Institute for Supply Management (US); Web: www.ism.ws/ISMReport/index.cfm
8. Nonfarm payrolls
Nonfarm payrolls indicator is very strong indicator that shows the change in the level of employment in the country. The growth of this indicator reflects an increase in employment and leads to an increase in USD. It is called the indicator which moves the markets. There is a rule that an increase in its value to 200 000 per month is equivalent to an increase in GDP by 3.0%.
Publication: first days of the month at 1.30 PM (EST). Source: Bureau of Labor Statistics, Department of Labor (US); Web: www.bls.gov/news.release/empsit.toc.htm
9. Retail Sales
The index shows the change in the volume of sales in the retail trade. It characterizes the level of consumer spending and demand. The growth of retail sales is a positive factor for the development of the national economy and leads to an increase in the national currency.
Publication: in the middle of the month at 8.30 AM (EST). Source: U.S. Census Bureau; Web: www.census.gov/marts/www/marts.html
Please see online resource for detailed definition of each above indicator. And I will present the real data of Macroeconomic indicators in my future posts.
