There is a lot of economic data released each week but there are some reports that hold special significance – these are reports that traders really get up for. The data released in these reports often shapes the entire trading session.
The state of the current economic cycle also has an impact on how anticipated each of these reports are. For example, during boom times, most eyes will be on inflation and the consumer price index as people watch for signs that the economy is overheating and during tough times, the employment numbers (i.e. non-farm payrolls) are center stage as economists look for a rebound in job losses.
Either way, if you follow the markets passively or actively, make sure these blockbuster economic reports are always on your radar lest you run the risk of getting blindsided by market sentiment.
Jobless claims
The number of people who file for unemployment benefits in a given week. This data is collected by the Department of Labor, and published as a weekly report. The number of jobless claims is used as a measure of the health of the job market, as a series of increases indicates that there are fewer people being hired.
Consumer Price Index
CPI. An inflationary indicator that measures the change in the cost of a fixed basket of products and services, including housing, electricity, food, and transportation. The CPI is published monthly. Also called cost-of-living index.
Non-farm payroll
A statistic gathered by the U.S. Bureau of Labor Statistics, which represents the payroll data for the majority of the United States with the exception of a few categories of employees. The employees that are not included in this calculation include government employees, nonprofit employees, individuals who work within a private household, and farm employees. Once these categories are removed, the data represents about 80% of United States employees, and provides monthly information about salary which is used as an indicator of the health of the economy.
Producer Price Index
PPI. An inflationary indicator published by the U.S. Bureau of Labor Statistics to evaluate wholesale price levels in the economy. Previously called Wholesale Price Index.
Beige Book
Report on current economic conditions, published by the Federal Reserve Board eight times each year. The Beige Book is part of the Federal Open Market Committee's preparations for its meetings. The report is released two Wednesdays before each FOMC meeting at 2:15 pm EST. The book is a summary of economic conditions in each of the Fed's regions. The report is primarily seen as an indicator of how the Fed might act at its upcoming meeting.
Consumer Confidence Index
A measure of consumer optimism toward current economic conditions. The consumer confidence index was arbitrarily set at 100 in 1985 and is adjusted monthly on the basis of a survey of about 5,000 households. The index considers consumer opinion on both current conditions (40% of the index) and future expectations (the other 60%). The Consumer Confidence Index is closely watched because many economists consider consumer optimism an important indicator of the future health of the economy.
Durable goods orders
A government report which measures consumer spending on long-term purchases, products that are expected to last more than three years. It is intended to offer a gauge of the future of the manufacturing industry. The report is made at 8:30 am EST around the 26th of each month and is thought to provide insight into the future for the manufacturing industry. The reports are broken down by industry, which helps to eliminate the effects of single volatile industries like defense spending.
Gross Domestic Product
GDP. The total market value of all final goods and services produced in a country in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports. The GDP report is released at 8:30 am EST on the last day of each quarter and reflects the previous quarter. Growth in GDP is what matters, and the U.S. GDP growth has historically averaged about 2.5-3% per year but with substantial deviations. Each initial GDP report will be revised twice before the final figure is settled upon: the "advance" report is followed by the "preliminary" report about a month later and a final report a month after that. Significant revisions to the advance number can cause additional ripples through the markets. The GDP numbers are reported in two forms: current dollar and constant dollar. Current dollar GDP is calculated using today's dollars and makes comparisons between time periods difficult because of the effects of inflation. Constant dollar GDP solves this problem by converting the current information into some standard era dollar, such as 1997 dollars. This process factors out the effects of inflation and allows easy comparisons between periods. It is important to differentiate Gross Domestic Product from Gross National Product (GNP). GDP includes only goods and services produced within the geographic boundaries of the U.S., regardless of the producer's nationality. GNP doesn't include goods and services produced by foreign producers, but does include goods and services produced by U.S. firms operating in foreign countries.
Retail sales index
A monthly measurement of all goods sold by retailers based on a sampling of retail stores of different types and sizes. The retail sales index is often taken as an indicator of consumer confidence. Released at 8:30 am EST around the 12th of each month, the report reflects data from the previous month. This report is the "advance" report, which can be revised fairly significantly after the final numbers are calculated. Many analysts choose to look at the figures "ex-auto", which means excluding the volatile car sales figure. It is thought that this number is a better measure of across-the-board purchasing trends. The report does not include money spent on services, so it represents less than half of total consumption during the month. However, even with these limitations, the figures are closely watched as an indicator of the health of the economy.
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