Major US Fundamental Indicators, an Introduction

What type of Economic Data is Important?

Most major economies around the globe collect and measure very similar forms of economic data. Sifting through this data can be a bit daunting if you are not well prepared with an understanding of what to look for. Furthermore, traders need to understand which economic indicators carry the most weight, in terms of potential to impact the market. Many economic indicators are considered of lesser importance to the immediate price volatility of a currency. However, these same indicators pooled together can collectively make their mark.

In other words, one large indicator can in and of itself impact a currency’s value. On the flip side, one lower-end economic indicator is unlikely to impact the market alone. Unfortunately, many traders understand this concept without understanding the following: though one lower-end or less significant economic indicator is unlikely to in and of itself move the market, a group of smaller indicators can certainly impact a currency… given that their collective sentiment negatively or positively reflects a nation’s economy.

A serious fundamental trader will first and foremost monitor the numbers and data of every major economic indicator. As a secondary objective, the same fundamental analyst would note the correlation of smaller or lower-end economic indicators, i.e. in a given week is their collective data all negative or positive?

12 Major US Indicators

As a general guide, consider the following 12 US economic indicators of key importance to the value of the US dollar and the overall economic sentiment in the United States. Each indicator is further broken down and described as you continue your reading of further courses within this section of the university. Remember, various countries around the globe will use some of these same economic indicators, perhaps titled slightly differently, and of course will also have their own key indicators, or means of measuring economic data.

1. GDP (Gross Domestic Product)

2. Indices of Leading, Lagging, and Coincident Indicators

3. The Employment Situation

4. Industrial Production and Capacity Utilization

5. Institute for Supply Management Indices

6. Manufacturers’ Shipments, Inventories, and Orders

7. Manufacturing and Trade Inventories and Sales

8. New Residential Construction

9. Conference Board Consumers Confidence and University of Michigan Consumer Sentiment

10. Advance Monthly Sales for Retail Trade and Food Services

11. Personal Income and Outlays

12. Consumer and Producer Price Indices