Global economic indicators
- Analyst AZA
Global economic indicators: origin and impact
The situation in financial markets depends in many respects, not on important economic indicators, but their differences, such a disagreement factor, with analytical data and information from experts. Taking as a basis global data and economic indicators that are provided by companies and special institutions, experts form an evaluation of the data and build, based on the information received, forecasts, putting forward possible scenarios.
If most of the experts lean into one or another line, there is a preponderance, which in turn affects the price fluctuations and shapes the market situation. In the US, there is a certain number of such instruments, on which investors and stock traders are oriented.
Here are several global indicators:
- GDP- GDP, which is responsible for the total price of products and measures the cost of services that are produced not only domestically but also abroad.
The level of such a product is presented not only in the current but also in basic monetary units: this expression gives a chance to estimate the real market price of products and trace the dynamics of the economic growth of the state as a whole.
The rate of GDP is 2.5-3% per year. Deviation from the normal indicator provokes inflation, a recession, thereby forcing the Fed to a policy of regulation (raising or lowering rates).
- CPI - the index of consumer prices, which is the price, so to speak, the value of the consumer basket of various goods. The increase in this indicator leads to a decrease in stock prices and an increase in rates in the credit industry.
- Conference Board Consumer Confidence is the indicator that is responsible for consumer confidence.
This indicator demonstrates the level of reliability of households at the forefront of the economy, showing us its sustainability, both now and in the future. This is one of the leading indicators of future costs and business cycles.
The confidence indicator has a direct bearing on consumer spending. They account for two-thirds of the total demand in the economic sector. Also, the index is associated with unemployment, inflation and real data on profitability. To calculate this indicator, a survey of consumers (about 5 thousand) is conducted every month. The standard is level 100, and the significant deviation is the parameter, more than 5 points.
- Industrial production is a monthly indicator that is responsible for the pace of industrial expansion.
The index reflects the strength of the national currency and the stock exchange. There is a direct dependence: an increase in the index stimulates growth on stock exchanges, with a decrease - stocks fall in price. The value is expressed in per cent, relative to the previous period.
- The report on applications for durable goods - Durable Goods Orders.
As a rule, these are expensive goods - cars, jewellery or household appliances. The indicator shows the expectations of consumers and reflects their ability to spend. The increase in the parameter indicates an increase in the economy and production, the stock market is growing stronger. Reduction operates oppositely.
But how exactly are stocks related to the turnover of capital? What drives the system and what acts as a starting point?
If we talk about the US, the main indicator is FFR - the Federal Interest Rate.
This indicator is defined and regulated by an organization such as the Federal Open Market Committee (FOMC). He goes to the publication in economic sources regularly - once every six weeks.
The calculation of FFR depends on the law: any bank of the Fed must have, at the end of the working day, a fixed percentage - about 10%. This figure is calculated based on the number of loans that are given to citizens. If the funds are insufficient, the bank undertakes to borrow the amount necessary for it (loans from other banks). This is the Federal Interest Rate - a loan of money for the night. The rise of the index is bad for the stock market.
As for the leading financial and economic indicators, it is:
1) The index of the use of resources by industry is an important indicator reflecting the growth of industrial production and economic growth.
It is calculated as a percentage and is expressed in terms of historical data. The most acceptable level is 81.5. If the indicator is reduced by 5% or more, then it is fraught with a sharp drop in stock markets. A strong increase, more than 80%, on the contrary, overheats the economy too much and affects negatively inflation.
2) ISM is the index of the association of managers responsible for procurement.
It consists of 5 important indicators:
- new orders;
- Production branch;
- Reserves of finished goods;
- supplies of parts and equipment;
It is calculated on a scale from 0 to 100. If the index is above half, it tells us about the growth of production and the economy as a whole, if at a level of 45% - stagnation (with a fixed growth), below 40% - stagnation, above 60% - a complete overheating of the economy. This is a very important indicator.
3) Unemployment Ratio.
A very significant macroeconomic indicator and the main instrument of the labour market, which is determined by the ratio - the total number of unemployed to the total indicator of able-bodied citizens. Marking a parameter above 6% means a low economic position, below 4% - overheating of the economic sector.
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