The US economy and US economic data remain a vital part of the fundamental trading toolkit, as they lead the way for global markets from both a stocks perspective, and a forex perspective. The way the USD trades, and the value of dollar in general is a huge economic influencer, as it remains the main reserve currency, and the currency in which many commodities are valued.
As a result, we are focusing here on bringing you the 10 most important US economic data points to pay attention to, as well as some more detail on why they remain important on a global scale.
Top 10 US Economic Data Points To Know
There are a few key economic indicators that you can watch periodically to get a sense of the overall health of the US economy that could help point you in the direction of improved fundamental trading performance. Here are some of the most important ones:
1. Employment data
The economic data includes both the number of new jobs created each month, as well as the unemployment rate. The unemployment rate is especially important, as it can give you a sense of how many people are actively looking for work but unable to find it.
2. Housing data
Housing data includes both new home sales and existing home sales. This is important because housing is a key driver of the economy, and when there is strong demand for housing, it can lead to other areas of the economy picking up as well.
3. Inflation data
Inflation data is a key point to watch, as it gives a general picture of the balance between economic policies, and the cost of living being experienced by millions of US citizens.
In simple terms, this is the measure of how much prices are rising or falling on a monthly basis and are compared in % terms year over year. This is important to watch because it can give you a sense of whether the economy is growing or shrinking.
4. GDP data
GDP or Gross Domestic Product is is the measure of the total value of all goods and services produced in a country in a given year. This is important to watch because it can give you a sense of how fast the economy is growing.
5. Manufacturing data
Including both new orders and production levels, manufacturing data is important because manufacturing is a key driver of economic growth, and when there is strong demand for manufactured goods, it can lead to other areas of the economy picking up as well.
6. Consumer spending data
This includes both retail sales and personal consumption expenditures. Consumer spending data is important because this remains a key driver of economic growth, and when there is strong demand for goods and services, it can lead to other areas of the economy picking up as well.
7. Business investment data
Business investment data includes both new orders and capital expenditures.
This is important because business investment is a key driver of economic growth, and when there is strong demand for investment, it can lead to other areas of the economy picking up as well.
8. Trade data
Trade data looks at both exports and imports to get a picture of how balanced an economy is, and whether you are moving direction from a perspective of important economic sectors. This is important because trade is a key driver of economic growth, and when there is strong demand for goods and services, it can lead to other areas of the economy picking up as well.
9. Government spending data
Looking at both federal and state government spending is important because government spending is a key driver of economic growth from an infrastructure perspective and generally gives a picture as to how healthy the government balance sheets are.
As the largest economy in the World, when the US government is spending on a high level, you can expect to see impetus in various economic sectors that lead to other areas of the economy picking up as well.
10. Interest rates
Interest rate levels set the baseline of the cost of borrowing money. This is important because it can give you a sense of how expensive it is for businesses to borrow money and invest in new projects, as well as the rates for mortgages.
High interest rates usually mean that inflation may be getting a little too hot, and monetary policy is reigning in spending, but that is not always the case.
When interest rates are high, and the cost of borrowing is high, it can lead to slower economic growth moving forward as spending inevitably reduces which can impact many other economic sectors. Many traders wait eagerly for the Federal Reserve minutes to be released to comb through.
US Economic Data Points Summed Up
These 10 US economic data points are just a few of the key economic indicators that you can watch on a monthly basis to get a sense of the overall health of the US economy. By keeping an eye on the data, you can get a better idea of how the economy is performing and what areas might be doing better or worse than others.
One piece is of data in a silo is not going to tell you all that much, but when you look at the set of data holistically, you can interpret more easily from a fundamental trading perspective what might be happening in the US economy on a macro level. This should then feed into your overall trading plan, whether it be US stocks, ETFs, or forex trading, you will want to have a general idea on the economic direction of the US.
Why is US economic data important
The US economy is the largest in the world and has a big impact on global economic outlook. Recently, the US economy has been growing at a faster pace than most other developed economies.
US economic growth is historically aligned with a period of global economic prosperity as trade and consumption in the US can have a rather significant impact on the performance of other Countries’ economic health.
A large, healthy US economy is good news for the rest of the world as it suggests that American consumers and businesses have more money to spend on imported goods. This increased demand can lead to higher prices for exports and a positive effect on the balance of trade.
A strong US dollar, and growing US economy has a domino effect
The US is also a big player in global financial markets. A strong US dollar makes other currencies weaker, making US exports more expensive and imports cheaper. This can have knock-on effects on economies around the world.
For example, if the US dollar strengthens against the Euro, then European exports to the US become more expensive, while US exports to Europe become cheaper. This could lead to slower economic growth in Europe and a boost to the US economy.
A period of disruption after years of unprecedented growth?
The US economy was expected to continue growing at a robust pace in the coming years, but that outlook now looks to have less confidence in light of geopolitic tensions, supply chain issues, high levels of inflation and of course the war in Ukraine.
A recession in the US now does not seem as unlikely as just 12 months ago, and this could have significant impacts on the key economic partners of the Worlds largest economy.
Many experts have said that the global economy is more interconnected than ever before, and what happens in one part of the world can quickly have an impact on other economies. This is especially true for the US economy, which is still the largest and most influential in the world.
The recent slowdown in US economic growth has led to concerns about a potential global economic recession. If the US economy weakens further, it could lead to job losses and lower incomes around the world. A recession in the US would also likely lead to a fall in global stock markets and could make it harder for countries to finance their debt.
It is clear that the health of the US economy is crucial for the global economy. A strong and growing US economy is good news for the rest of the world, but a weakening US economy could have serious global implications. That being said, there are still ways to trade in downward trending markets, so if that does happen, you still have options!