Use Relevant Data for Business Forecasts

• Recession is a poor indicator of economic health.
• Growth slowing significantly causes almost as much damage as an official recession, but doesn't provoke as much concern because it's not negative.
• The declining rate of economic growth matters more than whether a technical rec...

• Stock markets are ultimately tied to corporate profits and thus consumer spending.
• When consumer spending declines, profits and markets follow.
• Interest rates also affect markets through impacts on spending.
• Understanding consumer spending helps predict market booms a...

The Federal Reserve's interest rates influence consumer psychology and inflation, but they don't directly determine consumer spending. Their economic impacts are indirect.

People mistake the Fed's attempts to cool down or stimulate growth via rates as linked to spending, but the rel...

Consumer spending drives most economic activity, so indicators tied directly to spending, like personal incomes and interest rates, make the best predictors of overall economic performance.

Consumer spending leads to production and capital investment, so forecasting it well forecast...

Employment levels actually lag economic changes rather than predicting them. Hiring drops when the economy declines and rises when it improves again.

Look at consumption instead to predict employment, since spending heads upward first. Consumption rising means employment will follow...

History shows to buy stocks when the economy looks bleak but consumer spending shows signs of improvement.

The best time to sell is when consumer spending and growth peak. This contradicts the instinct to buy when times seem good and sell when worried.

Take the counterintuitiv...