Consumer sentiment – Survey of consumer attitudes concerning both the present situation as well as expectations regarding economic conditions conducted by the University of Michigan. Five hundred consumers are surveyed each month. The level of consumer sentiment is directly related to the strength of consumer spending. Consumer spending accounts for two-thirds of the economy, so the markets are always dying to know what consumers are up to and how they might behave in the near future. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. With this in mind, it’s easy to see how the index of consumer attitudes gives insight to the direction of the economy. Changes in consumer sentiment and retail sales don’t move in tandem month by month.


Consumer Price Index (CPI) – Measure of the average price level of a fixed basket of goods and services purchased by consumers. Monthly changes in the CPI represent the rate of inflation. The CPI is the most followed indicator of inflation in the United States. Inflation is a general increase in the price of goods and services. The relationship between inflation and interest rates is the key to understanding how data like the CPI influence the markets. By tracking the trends in inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform.

Current account – Measure of the country’s international trade balance in goods, services and unilateral transfers. The level of the current account, as well as the trends in exports and imports, are followed as indicators of trends in foreign trade. U.S. trade with foreign countries hold important clues to economic trends here and abroad. The data can directly impact all the financial markets, but especially the foreign exchange value of the dollar.

Books

Beige Book - District banks have been printing summaries of the economic conditions in their districts since 1970. Initially this “Red Book” was prepared for policymakers only and was not intended for public consumption. It was made public in 1983. To mark this change, the color of the cover was changed and the publication became known as the Beige Book. The Beige Book is released two weeks prior to each FOMC meeting eight times per year. Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its district through reports from bank and branch directors and interviews with key businessmen, economists, market experts, and other sources. The Beige Book summarizes this information by district and sector. An overall summary of the twelve district reports is prepared by a designated Federal Reserve Bank on a rotating basis. The report is primarily seen as an indicator of how the Fed might act at its upcoming meeting.