Understanding the Basics : Economic Data Reports

What is a Data Report?

Economic Data Reports are tools that investors use to evaluate the health of the economy. From how inflation is affecting prices to government policy influence to interest rates, data reports give any investor an edge. These reports, usually statistics, are regularly released throughout the year. Who makes these reports? Well, central banks like the Federal Reserve usually release the data.

What are examples of Economic Data Reports?

• The first, and some of the most important reports, are the inflation reports. Starting with the Consumer Price Index (CPI), it measures the change in prices paid for goods and services by consumers. Higher CPI = higher inflation. Next, the Producer Price Index (PPI) is kind of the opposite of the CPI, as it measures the change in prices for a company rather than the consumer.

  
  

• The second set of reports are employment data reports. These reports, like the unemployment rate, tell investors how many jobs are being created and if these jobs are being filled.

  
  

• Then there is consumer data. Reports such as the Consumer Confidence Index (CCI) tell us if consumers are confident or not confident in the market. If the CCI is high, people feel good about the economy, so they spend more money, which boosts growth. On the contrary, if the CCI is low, people worry about the economy, which hurts growth.

  
  

• Finally, the last big one we'll talk about today is GDP reports. GDP, or Gross Domestic Product, measures the actual absolute value of all goods and services produced in a country.

  
  

The impact of an economic data report all depends on what Wall Street predicts for that report. For example, if Wall Street predicts GDP growth to be 1.2% and the actual report is growth of 1.5%, then there is a 0.3% upside, which motivates investors to boost the market. Another example is this past Monday; inflation data came out that was higher than what Wall Street predicted. This caused the market to close lower on Monday.

What are Company Reports?

Every quarter, a company releases its earnings per share and its revenue for its respective quarter. Wall Street makes predictions for how much they think these numbers will be. For example, for the last quarter of 2024, Alphabet (Google's parent company) released their report, and their revenue was below what Wall Street predicted. This caused the stock to fall over 6% in one day!

Ultimately, economic reports are what drive the stock market. Consistent reports are what can either make or break a company in the long run.

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Tell us your favorite economic indicator in the comments!