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Go to the source to make your own predictions for economy

Denver Business JournalOn the Money
From the June 3, 2011 print edition

There are plenty of predictions made about finance and economics.  In fact, a search for “money predictions in 2011” generates more than 28 million hits.

Money predictions generally are tied to raw data, which is gathered and organized in a way to form “indicators.”  Analysis of indicators produces the predictions.

In general, indicators tell us about the movement of money or activities that drive that movement.

By observing activity in areas such as personal spending, construction, levels of inventories, etc., as well as building relationships between one or more of the indicators, we can measure the economy’s health — and maybe predict it, depending on the quality of the prognosticator.

Not everyone wants to rely on someone else’s examination and analysis.  That can make the prediction as flawed as the biases of the individual.  So where can we find the source of the indicators to make our own predictions?

Here are the top 12 indicator reports produced by the U.S. Census Bureau and the Bureau of Economic Analysis, along with a brief explanation of the content.

Most of these reports are produced monthly; with modifications during the month should significant changes occur.

  • Advance monthly retail sales — This is a report of the dollar value of sales of a broad range of goods, from cars and gasoline to furniture, food services and clothing.  Through the use of surveys of about 5,000 companies, this report does attempt to make an advance prediction of the upcoming month’s retail activity.
  • Personal income and spending — This report shows the income that households receive from all sources, including wages and salaries, employer contributions to pension plans, rental properties, and dividends and interest.  It also includes data on personal spending, as well as the percentage of their income that households are saving.
  • Advance Report on Durable Goods — “Durable” means that the items have an expected life of at least three years.  This report is similar to the retail report, except items range from computers and furniture to autos and defense aircraft.  The Census Bureau’s report on factory orders (below) includes revised and more detailed estimates of durable goods shipments and orders, plus estimates for nondurable goods.
  • Factory orders (manufacturers’ shipments, inventories and orders) — This information is expressed as the dollar level of new orders for manufactured durable goods and nondurable goods.  This report gives more complete information than the Advanced Report on Durable Goods, which is released earlier in the month.
  • Construction spending — Again, the dollar value of new construction activity, which includes residential projects (homes and apartment buildings), nonresidential projects and public projects — for example, schools and highways that are funded by the local, state, or federal government.
  • New residential construction — Also known as “Housing Starts and Building Permits,” this report organizes and presents data regarding the construction of new private residential structures, such as single-family homes and apartment buildings.
  • New home sales — The number of newly constructed homes with a closed or committed sale occurring during the month
  • Wholesale trade — The sales and inventories of U.S. merchant wholesalers are tabulated in this report.
  • Manufacturing and trade inventories and sales — Also known as “business inventories,” this is a report of the dollar value of product inventories held by manufacturers, wholesalers and retailers.  Two important calculations are in included: the inventories-to-sales ratio and an estimate of the number of months it would take to exhaust existing inventories at the current rate of sales.
  • U.S. trade balance — This widely visible and well-known measurement reports the difference between the dollar value of exports and imports.  Foreign trade is an important component of aggregate economic activity, representing a significant portion of gross domestic product.
  • Current account balance — Also known as the “current account deficit,” this quarterly report is a measurement of net U.S. trade in merchandise, services and certain financial transactions.
  • Gross Domestic Product (GDP) — Also produced quarterly, this reports the market value of all final goods and services produced in a given period.

These reports are so important to economic functioning; they have specific release dates and times.  To see those, visit: http://www.census.gov/epcd/econ/www/indijun.htm.

To receive these reports via email, you may sign up at https://public.govdelivery.com/accounts/USESAEI/subscriber/new?. To find the most current version of all reports, along with links to historical information and useful charts, visit http://www.census.gov/cgi-bin/briefroom/BriefRm.

© C. Stephen Guyer for American City Business Journals Inc. All rights reserved.