What Are the Major Economic Data Releases?

By James Brumley

Information can be empowering for investors, but that doesn’t mean all information is equally powerful. Here’s a look at the economic data that matters most to the market.

Unemployment: The correlation between rising unemployment and falling stocks is uncanny, as is the correlation between falling unemployment and rising stocks. Bear in mind that this relationship is most prevalent in long-term data.

Inflation/CPI: Despite the assumptions that high inflation is a drag on the markets and low inflation is positive, there is no empirical evidence of that notion. The inflationary environment is important to understand though, as it affects which sectors perform better than others.

Consumer Confidence: While frequently dismissed as an unpredictive opinion poll rather than a data set, the correlation between improving confidence and rising stocks is remarkable. Likewise, sinking confidence coincides with a falling market.

Capacity Utilization: How much of our manufacturing capacity is actually being used? Unused tools, equipment, and factory floor space is still rented, paid for, and maintained… which means money is wasted. If at least 75% to 80% of total capacity isn’t used to generate revenue, then that capacity is likely costing companies more money than they’re making.

Industrial Production: Partially-related to capacity utilization, industrial production indicates the raw total value of goods that are being manufactured. Measured as a percentage change from one period to the next, rising production generally coincides with bullishness on the economy.

Durable Goods Orders: A true measure of fiscal and economic strength is the willingness and ability to order new goods. The durable goods orders figure indicates the total number of cars, appliances, toys, etc, that have actually been ordered – with the intent to pay for - in the measured time period.

ISM Services: The Institute for Supply Management Services Index is akin to durable goods orders, but instead measures real demand for, and spending on, non-tangible services and general business activity.

Other Important, But Less Helpful Data: While there’s no such thing as ‘too much information’, not all economic data is particularly helpful to – or predictive for - investors. The less-meaningful data often includes Gross Domestic Product (or GDP), Trade Balance, Jobless Claims (new or continuing), Factory Orders, PMI, Retail Sales, Wholesale Inventories, and Hourly Earnings.

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