If you can get past the boring and raw data, economic indicators can prove to be very handy. In the simplest way to describe it, an economic indicator report is pretty much any piece of information that can help investors decode what is happening in the economy. Try to think of the U.S. economy as a living, breathing entity. Always changing, always moving. In this regard, think of an economic indicator as an anatomy chart for this entity. Sure, it doesn't always predict how it will act, but it does better prepare you.



When selecting a report, try to personalize it by choosing a market and specializing in it. The market is too vast to be a "jack of all trades" unless maybe you're retired. But for the rest of us, we have our day jobs and we would like to spend at least a little time with our loved ones, right?

Keep an eye for inflation indicators. Wise investors always look out for signs of inflation. Perhaps the most notable inflation indicator is the Produce Price Index (PPI) and the Consumer Price Index (CPI). There is a proven statistical relationship between the two that many investors watch closely.

But perhaps the most important indicator is the Gross Domestic Product (GDP), mainly to equity investors who focus on corporate profit growth. Since the GDP represents the sum of what the ecomony is producing, its growth rate is targeted to be in certain ranges. If the numbers start to falter outside of those ranges, the fear of inflation or recession will build in the markets. This fear can often be checked by studying the monthly indicators that can give some insight into the GDP.

So remember, knowledge is power, or at least potential power. You have the opportunity to put some extra money in your portfolio, you just have to educate yourself.

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