U.S. Economic Indicators
Economic indicators are the scheduled data releases that tell investors how fast the U.S. economy is growing, how quickly prices are rising, and how many people are working. They matter to markets for one main reason: they change expectations about what the Federal Reserve will do with interest rates, and interest rates affect the value of almost every financial asset.
Most of the reports that move markets come from three federal agencies. The Bureau of Labor Statistics publishes inflation and employment data, the Bureau of Economic Analysis publishes GDP and the PCE price index, and the Census Bureau publishes retail sales and housing data. Many of these come out at 8:30 a.m. Eastern Time, an hour before the stock market opens, which is why stock futures often jump right before the bell.
The number itself is only half the story. Markets react to the difference between the actual figure and the consensus forecast, and to the details underneath the headline. A report can beat expectations and still push stocks lower if it raises the odds of higher interest rates.
Key topics in economic indicators
Inflation: CPI, PCE, and PPI
Headline vs. core inflation, why the Fed prefers PCE, and how a hot reading moves yields and growth stocks.
The jobs report and weekly claims
Nonfarm payrolls, the unemployment rate, revisions, and why strong hiring is not always good news for stocks.
GDP and its components
Advance, second, and third estimates, and the parts of GDP that say the most about where growth is headed.
Consumer spending and sentiment
Retail sales, the control group, and why sentiment surveys and actual spending sometimes disagree.
PMIs and manufacturing data
Why the 50 line matters and which ISM sub-indexes act as early warnings.
Treasury yields and the yield curve
The 2-year vs. the 10-year, curve inversions, and what they have and have not predicted.
What to watch
- The month-over-month change in core inflation, not just the year-over-year rate
- Revisions to the prior two months of payroll data
- Services prices excluding housing, a measure the Fed has watched closely
- How the 2-year Treasury yield reacts in the first hour after a release
Frequently asked questions
Which economic report moves the stock market the most?
It depends on what investors are worried about. When inflation is the main concern, the Consumer Price Index tends to produce the biggest reactions. When recession is the worry, the monthly jobs report often matters more.
What is the difference between CPI and PCE?
Both measure consumer prices. CPI comes from the Bureau of Labor Statistics and is released earlier in the month. PCE comes from the Bureau of Economic Analysis, covers a broader set of spending, and is the measure the Federal Reserve uses for its 2% inflation target.
Why do markets react before the data is even released?
Investors position ahead of major releases based on forecasts. When the actual number arrives, prices adjust to the size of the surprise relative to those forecasts.
Official sources
- Bureau of Labor Statistics release calendar
- Bureau of Economic Analysis release schedule
- Census Bureau economic indicators calendar
For the full picture, read our complete guide to what moves the stock market.