An economic drama is playing out as you read this, one whose next act is about to unfold. It began quietly enough on Thursday, Jan. 6, when the U.S. Department of Labor issued its weekly report on first-time unemployment-insurance claims. It found that 364,000 workers filed initial claims for unemployment benefits for the week ending Jan. 1 -- 43,000 more than during the previous week. The stock market rose slightly that day.
Events took a different turn the next day, Jan. 7, when the U.S. Department of Labor issued its job-creation report for December. That report revealed that the U.S. economy added 157,000 jobs during the last month of 2004. That was a big enough number to suggest the economy was continuing to grow at a decent pace, but it was lower than many economists had expected. The stock market fell slightly that day.
The two were typical encounters in the complex and continual interplay between economic indicators and the financial markets.
Another key turn in this drama is due on January 13, when the Bureau of the Census will report its first rough estimate of retail sales during December. No doubt that report also will prompt close scrutiny by investors, company managers and economists. After those numbers are released, Knowledge@Wharton will provide an update on how it all plays out with help from Bernard Baumohl, author of The Secrets of Economic Indicators, published by Wharton School Publishing.
An array of government agencies and private groups compiles and regularly issues economic indicators. Jobs, consumer spending, consumer confidence, factory orders, business inventories, home sales, foreign trade, inflation, Federal Reserve Bank surveys. The list seemingly is endless.
But why should anyone other than Alan Greenspan care about economic indicators? "Because these are vital barometers that tell us what the economy is up to and, more importantly, in what direction it is likely to go in the future," Baumohl says.
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