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The Secrets of Economic Indicators: Hidden Clues to Future Economic Trends and Investment Opportunities

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On any given weekday, stocks and bonds gyrate in response to some economic announcement.

Bernard Baumohl, a Time magazine economics writer with more than 20 years of experience, has written a guide to these indicators and their importance to the financial markets.

The book promises to become dog-eared quickly. In concise language it explains what Baumohl indicates are the most influential U. S. and International Economic Indicators. Beginning in Chapter 2, the author defines the phrases and concepts essential to an understanding of the indicators.

In Chapter 3 he jumps into the heart of the matter: U. S. economic indicators. Each indicator is evaluated using the following criteria:
* Why is it important?
* How is it computed?
* What does it day about the future?
* How might stocks, bonds and/or currencies react to its announcement?

In Chapter 4, he examines the 10 most influential foreign indicators using the same criteria.

In the final two chapters, Baumohl provides a list of web sites that compile economic data. What in the past costs thousands of dollars is available on the web at no cost.

If any facet of your life is effected by these indicators, you owe it to yourself to keep a copy of this book nearby.

Bernard Baumohl's "The Secrets of Economic Indicators: Hidden Clues to Future Economic Trends and Investment Opportunities" starts off with a riff on how investors got sold out by their "expert" advisors and even the stock-issuing companies themselves during the recent crash. He contends investors are in the need for better guidance. The solution, he says, is an individual investor do-it-yourself approach to fundamental macroeconomic analysis based on the reported data that underlies both the domestic and international economy.
Make no mistake, this is one of the most useful and fundamentally sound readings of how economies really work you will ever see - much more revealing and educational than a raft of academic books purporting to teach us how the theoretical economy is supposed to function. This book magnifies the real workings of an economy (daily, weekly, monthly) - the inputs that produce the outputs - and how the data generated from those workings is reported, analyzed, and used.
Baumohl lists 4 weekly, 43 monthly, and 9 quarterly releases of data in short outline form along with what they are, when they're reported, and how they're computed, along with their expected effect on the stock market, interest rates, and the dollar.
His goal, he states, is to answer the question of which indicators pack the greatest wallop in the financial markets and which ones are known for doing the best job predicting where the economy is going, thus influencing investments. He assigns a relevance rating to each of the indicators.
It's easy to get overwhelmed quickly and Baumohl is right when he laments that "There is too much economic information out there, and not all of it is useful."
He should have added "not all that accurate" either.
As you leaf your way through the compilations, you come to realize that the "numbers" that move the markets are frequently incomplete. The queried respondents upon whose businesses and operations are being used to create data are notoriously negligent in meeting reporting deadlines which brings up the question of whether we ever get a full reading of what's being reported. Thus the need for "restating" next time around. But by "the next time," those numbers are irreverent and relegated to history. Question: So, was that big market move last month based on bad info, and if so, will it correct itself when the old data is corrected? Not likely, because a new set of questionable data just got reported and is now at center stage. Deja vu all over again.
For all the questions it raises, this is a good attempt at trying to get a grip on the maze of financial accounting we're still trying to clean up, but it points out more holes than it fills.
One thing Baumohl doesn't address which would be a good subject for a follow-on book is that indicators don't have the same influence consistently through time. Each seems to have a life all its own. From the body counts (Vietnam) of the late 1960s, to the oil price increases of the mid-1970s, to the prime rate increases of the late 1970s, right on through the monthly deficit numbers of today, one influential indicator periodically rises to become the focal point of the press and the Wall Street pundits. Relative importance comes and goes with the seasons, and it would have been good to see a 40-year chart clearly delineating how dominant indicators of the time influenced direction of the various markets.
Another issue not confronted is the role played by hedonic influences on various indicators. How should we adjust for increased computer RAM or safety features of automobiles or effectiveness of medical treatment?
A third question concerns whether the market's reaction operates in a vacuum. Is the day the report comes out merely one more in a series of "jolts" or does it become the tipping point that truly reverses a trend which was waiting for an ignition spark?
A final observation sums up the underlying but unspoken concern about the whole system of governmental collected and reported figures. The world's most important investor (Alan Greenspan) obviously relies on these figures to make financial and monetary decisions. It is disconcerting to read how many of these indicators are less than what one would expect them to be. Whether Greenspan can make the correct decisions based on sometimes questionable statistics is a question that perhaps will never be answered.
In the mean time, we can all learn a lot about the "numbers" that have an increasingly important impact on our daily lives, to say nothing of our investments.
Read it and consider your options.
For a different angle on how the markets work see Ron Insana's excellent "The Message of the Markets" (2000) and "Trendwatching" (2002) which deal with the reality of prices rather than suppositions.

This book by Baumohl is a good book to have in one's reference library if you use government and private indicators to try to ascertain where the economy and, more specifically, the stock market might be headed. Bernard has not only listed all the most common indicators, but has given the source, quality, reliability, timing, and importance of each indicator upon the markets.

Will this book make you a better trader or investor? By itself, probably not. But, it is always useful to understand what indicators the 'general public' is viewing and how these indicators tend to impact on an un-informed investor's actions. It is probably a book more useful to a seasoned investor who is continuing to work to improve his investment analysis methods and his understanding of how various indicators can 'psychologically' impact the markets.

Baumohl, a former economics reporter for Time magazine, has written a tremendously useful source on economic indicators. Using examples from real life, he starts out by explaining in detail the importance of these indicators to the investing community and defining the terms used when discussing measures of economic performance. The most valuable section of the book provides detailed descriptions of over 40 economic indicators, among them employment, consumer spending, national output and inventories, housing and construction, foreign trade, and productivity and wages. Baumohl considers a variety of factors when describing each indicator, such as what exactly it measures, how it is computed, where to find the relevant report on the web, the day and time this report is released, the source of the information, and how often the information is revised. He also discusses the market impact of these indicators on bonds, stocks, and currency. The book ends with profiles of international indicators and a listing of where to locate them on the web. Bottom Line: Although this book is marketed as a tool for investors and is not organized like a typical reference book, it belongs in the reference collection because it explains so clearly what the various economic indicators are and how to locate data about them. Recommended for all libraries.

There is so much information in this book a review need only be brief. "The Secrets of Economic Indicators" has the most accurate and concise definitions for terms, indicators, indexes, and general information about them than most other books on this topic. All of the contact information on these agencies and groups are provided. The brilliance in this book is its a) organization b) succinctness c) writing style. Written to point, and for the layperson. Easy reading.

Many terms that you hear and don't hear on financial channels and newspapers are provided with definitions. Including the weight analysts place on these specific terms, numbers, and indexes. Some are more important and relevant than others. What do Leading Indicators mean? Which ones tell more than the others? And, what does this mean for someone who's investing, or thinking of investing?
Are we about to turn a corner for better or worse? Domestic to International. Japan, Germany, China, and Brazil for example.

Here are the basic introduction backgrounds for most reports and surveys:

What is it:
News Release on the Internet:
Home Web Address:
Release Time:
Frequency:
Source:
Revisions:

Why Is It important:
How Is It Computed:
Tables:
Market Impact:
-Bonds
-Stocks
-Dollar

So what is the "Value of Manufacturer Inventories for Industry Groups?" Find out it in this book. What is included in Index of Lagging Indicators. Who (what people), are included in the Coincident Indicators? Critical to these reports is the "Market Impact." What impact does a report have? Do "Factory Orders" have on the financial markets? Not much.

Anyone can use this book. Students, investors, teachers, or someone who wants to know about what these reports mean. This is the most informative and the best written I've come across. It'll never become outdated.

Who would have thought there could be an entertaining book on economic indicators? As the Director of The Economic Outlook Group, a renowned consulting firm that evaluates global economic trends and risks, Bernard Baumohl is well qualified to write a tome about economic indicators no matter how dry the subject matter may seem to be. Luckily for us, he has instead written an excellent primer for understanding them and showing how to apply them to predicting future stock and bond market activity, as well as how the currency market will respond. Baumohl is an informative writer not caught up in details or equations that would alienate all but the most academic. With an easy-to-read writing style, he focuses on the indicators which have the greatest influence in the markets, selectively analyzing the ones that do the best job in predicting where the economy is heading. Moreover, he seeks out the indicators where the data are found most easily and in turn, how we can best interpret them. The author smartly presents his findings in an encyclopedic fashion to provide a run-down on 47 U.S. economic indicators, plus a few essential international indicators.

The book starts with "the lock-up," which he describes as the U.S. government's process to assure simultaneous availability to everyone of economic data when they are released. Such are the safeguards necessary to avoid leaks which would give anyone advance information that could be used improperly. The next section highlights a pivotal chart that takes the components of real gross domestic product - consumption, investment, inventory change, government spending, and net exports - and signs of price pressures, consequently matching each segment up with the key economic indicators for that segment. Subsequent tables list the economic indicators most sensitive to stocks, bonds, and the dollar, as well as the top ten international economic indicators. Suddenly, heretofore foreboding statistics become clear. Baumohl also provides valuable insight into the unpredictable housing market - with several chapters devoted to how to interpret the real estate-related indicators. Quite thorough in his treatment, he also provides a helpful guide to the economic jargon encountered in using the data, such as annual rates, real and nominal dollars, moving averages, revisions and benchmarks, and seasonal adjustments. Perhaps to the chagrin of registered investment advisors, he explains several important indicators that can be used for privately forecasting economic growth ignored by the mainstream press and goes as far as explaining how you can easily find these updated indicators (or compute them yourself) in most cases free of charge.

With this background, the book then turns to a description of individual economic indicators. Each entry for the economic indicators listed explains not only the what, why and how behind it but also what impact it can have on stocks, bonds and the dollar. Baumohl goes into the market sensitivity of each indicator (very high, high, medium, low), its availability on the Internet, release time, frequency, source, and revisions. I also find it interesting how he can lucidly explain how each indicator is computed. The author also goes into a relatively cursory discussion of international economic indicators and why they are important. In the same format as that provided for U.S. indicators, he also lists ten most important international indicators that include data for Germany, France, the Euro zone, the OECD, China, and Brazil. The last sections discuss the best Web sites for U.S and international economic indicators. This is a smart, informative read for anyone curious about the intricacies behind economic forecasting and the effect it has on our lives.

Gee, I wish my professor had recommended this book on economics from the beginning. It would have made my life a lot easier. This author nicely connects all the dots in explaining the links between the economy and individual economic indicators. I've read and gone back to it a few times because it helped clarify some concepts I struggled with in class. I recommend this book to anyone studying economics or business administration.

This book is the definitive reference encyclopedia for anyone interested in learning about economic indicators. It opens with a list of the primary U. S. and international economic indicators. The second chapter is a quick description of the terminology used to qualify an economic indicator. Phrases such as "moving average" and "seasonal adjustments" are explained.
The real material of the book begins in chapter three, "The Most Influential U. S. Economic Indicators." Each of the 47 indicators is described in detail, according to the following outline:

*) Market sensitivity.
*) What is it?
*) News release on the Internet.
*) Home web address.
*) Release time.
*) Frequency of release.
*) Source.
*) Revisions.
*) Why is it important?
*) How is it computed?
*) The tables, clues on what's ahead for the economy.
*) Market impact.
*) Bonds.
*) Stocks.
*) Dollar.

Chapter four describes the most significant international economic indicators. Three are German, two Japanese, one French, one Eurozone, two global, one Chinese and one Brazilian. These indicators are presented in the order of their importance. It must be noted that some of the U. S. economic indicators also deal with international business issues. Chapter five is a list of the best web sites for U. S. economic indicators and chapter six lists the web sites of the international economic indicators.
From now on, this book is my bible that I will consult any time that I have any question about an economic indicator. The explanations are clear, entertaining and can be understood by anyone with a fundamental understanding of economics.

Statistics do not usually top one's list for dynamic reading material, but Bernard Baumohl seeks to challenge that perception in his book.

Baumohl, an economist and financial journalist, whose experience has included time as an analyst at the European American Bank and at the Council on Foreign Relations, illustrates how economic indicators have an impact on our lives. Whether a key indicator goes up or down can influence a series of reactions in the markets including gas pump prices, performance of our 401K, and whether we still have a job.

For the first time, thanks to the Internet, the general public now has easy access to all these numbers, and Baumohl wants to be our guide to the statistics that matter. So here you will find clear descriptions of each well-known indicator, from gross domestic product to housing starts, along with interpretations of what the indicators really mean.

And you'll also read about foreign figures such as those tracking China's industrial production. The U.S. is the largest producer of economic statistical data, but a review of international indicators is necessary as well, says Baumohl. "Nearly half the earnings of the S&P 500 firms come from business generated outside the U.S. More than 22 million American workers-nearly two in ten jobs-are linked to foreign trade. One out of every four dollars generated in the U.S. economy is based on trade. What this all boils down to is that foreign economic indicators should be followed with the same regularity, interest, and scrutiny as the domestic indicators."

The book also includes a comprehensive list of mostly free Web sites where one can drill down on economic indicators cited in the book. Good reading for investors, financial pros, researchers, and journalists

Have never seen a book on financial/economic indicators that's so comprehensive and easy to read. Great graphics. Really well-written. Baumohl has a gift for taking a complicated economics and finance ideas and bringing it in the easy to read form.