Economic Indicators That Bear Watching

February 11, 1985|By Gretchen Morgenson, Money magazine

Many of the economic indicators you hear the most about are, in fact, the last ones you should depend on. Some are deceptively imprecise, others impossible to interpret; still others are merely statistics with no predictive value.

But some are actually useful. Here`s what Money magazine found economists and market analysts recommending most often:

ISSUED WHEN: Tuesday in financial newspapers, following the Treasury-bill auction every Monday.

MOST ACCURATELY PREDICTS: The direction interest rates will take.

BIGGEST WEAKNESS: Rate can vary week to week; may take months to spot a trend.

The T-bill rate gives a weekly clue to changes in the Federal Reserve System`s monetary policies.

Wage settlements

COMPOSED OF: Percentage changes in wages as a result of new labor contracts.

ISSUED WHEN: In newspaper reports of major labor settlements.

MOST ACCURATELY PREDICTS: An inflationary rise in the cost of goods and services.

BIGGEST WEAKNESS: To stay current, you must keep up on your reading and do your own computing.

If inflation spooks you, keep a close watch on major labor contracts when they come due for re-negotiation. Non-inflationary agreements are one reason many economists have concluded that the struggle with inflation may have been won, at least for a while.

Payroll employment

COMPOSED OF: The number of employees on company payrolls.

ISSUED WHEN: Generally, the first Friday of each month in most newspapers.

MOST ACCURATELY PREDICTS: Future consumer spending patterns.

BIGGEST WEAKNESS: Does not pinpoint which industries will experience the greatest demand for their goods and services.

The payroll employment figure provides your first clue as to whether consumer spending and industrial production rates are gaining or declining.