Monday, October 28, 2013

Most Important Macro Indicators (IMHO)

  • Trade Balance = Exports - Imports [Balance of Payments]
  • Current Account Balance = Trade Balance - Net Income from Abroad - Net Current Transfers [Balance of Payments]
  • GDP Per Capita [Real Economy]
  • GDP Growth Rate [Economic Growth]
  • Purchasing Power Parity - e.g. Big Mac Index - 
  • Government Budget Balance / GDP [Public Budget Figure]

 Some unusual but good indicators:
  • Lipstick Index: When finances are tight, consumers will forego large luxury purchases for smaller indulgences, like cosmetics.
  • Men's Underwear: If cosmetics are the small luxuries of tough times, men's underwear is the opposite: a basic necessity whose purchase can be pushed into the future until more disposable funds are available. Rarely seen, rarely replaced.
  • Divorce Rates: Financial problems strain a marriage, and make it more likely to break apart. 
  • Baby Diaper Rash Indicator: In a hope to save money, parents with newborns, babies, and toddlers try to cut back on costs by changing their child’s diaper fewer times throughout the day.