Which Economic Indicators Matter?
by Charles Rotblut, CFA and Aaron Smith
Aaron Smith is a senior economist for Moody’s Economy.com. He spoke to me recently about the economic indicators he watches and what they may be signaling for the direction of the economy and markets.
—Charles Rotblut, CFA
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Charles Rotblut (CR): What economic data do you consider to be the most important to look at?
Aaron Smith (AS): The data on employment is key because the jobs being created are what will generate the income necessary for spending. It’s that cycle that we need. You hear the term “escape velocity” for the phase when spending and hiring start to reinforce one another. It’s also the same point at which we typically say a recovery has made the leap to an expansion.
The weekly data on jobless benefit claims is really the best, most timely data that we have. It’s extremely accurate because it’s an actual count. It’s weekly versus monthly, and the data really gives us a feel for where labor conditions are in real time.
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Aaron Smith is a senior economist for Moody’s Economy.com and associate editor of the North American edition of the Dismal Scientist website, producing real-time online commentary and weekly analysis on the U.S. macroeconomy.