1. Consumer Confidence Index: This measures how consumers feel about the economy. It is a measure of whether or not consumers feel confident enough about the way things are moving to increase their spending or make large purchases. About 2/3 of economic activity in the U.S. is based on consumer spending, so you can see how consumer confidence is an important indicator.
2. Consumer Price Index: This is a measure of inflation. It keeps track of a basket of regularly purchased goods, such as clothing, groceries and more. You will often see a couple of different numbers, since there is often an overall number, and then a number with volatile energy prices taken out. Rising prices mean that inflation has entered the economy. In most cases, inflation is a sign of economic expansion and growth. However, too much inflation, too quickly can actually stymie economic growth and spook the markets.
3. Treasury Yield: This is a little more subtle economic indicator. However, it does have its uses. You can gauge investor sentiment with help from the Treasury yield. This is the rate that bond buyers accept when they invest in government bonds. (Note: Yield moves inversely to price.) When yields are low, it means that Treasuries are in high demand, and the government can get away with paying less interest. It also means that, since Treasuries are in demand, riskier investments like stocks are out of favor. Investors are turning to the relative safety of government bonds — which are backed by the world’s most reliable taxpayer base.

In the end, you can make more informed investment decisions, and get a better feel for the economy if you look to economic indicators and adjust accordingly.

Image source: Daylife

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Pay Attention to These Economic Indicators

The consumer confidence survey, which was conducted by private research group The Conference Board, should consumer confidence for September was 53.1. Following the August numbers coming in at 54.5, most experts believed that consumer confidence was to rise more than 2.5 points in September. That obviously didn’t happen.

The biggest culprit is a lack of job security. Many Americans are searching for jobs and even many Americans who have jobs don’t feel confident that their jobs will stick around. That has caused many people around the nation to dramatically reduce their spending, which isn’t good news for United States economy.

As a result of this unexpected drop in consumer confidence for the month of September, the stock market has been rocky on Tuesday.

Wall Street Unhappy with Drop in Consumer Confidence (Image: Flickr)

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Consumer Confidence Takes a Hit

Image: sxc.hu

People also had a more optimistic view of employment, according to the report. The percentage of people expecting the job outlook to improve saw a boost from just 7.3% to 13.9%, and fewer peopl expect to see the job market to get even worse than it is right now.

The Conference Board, based in New York, polls 5,000 people every month for their consumer confidence study. Overall confidence saw the biggest jump since almost a year ago.

The boost in consumer confidence bodes well for retailers, who hope that the worst is over for 2009. As shoppers begin to think that the future looks brighter, they will likely spend more money, which is an important step to the economy recovering.

Post from: EveryJoe

Report: Consumers More Confident in April