9. The big picture: macro, markets and news

Economic statistics (ECST)

ECST is a dashboard of the main US economic statistics (inflation, labor, growth, housing, rates), each with its latest value and a chart against its own history.

  • 3 min
  • 3 questions
  • Lesson 2 of 4

Why you would care

Where does the economy stand, in context? The calendar tells you what came out today; the dashboard tells you what it means in context. Is 4.1% unemployment high? Is 3.4% inflation unusual? Only history answers that. It is the one-screen economic briefing before any market conversation.

The idea from scratch

A handful of statistics describe the economy (chapter 01, The macro machine):

GroupMain statistics
InflationCPI and core CPI (consumer prices), PCE and core PCE (the Fed's preferred measure), PPI (producer prices)
LaborUnemployment rate, payrolls (jobs added), weekly claims, job openings
GrowthReal GDP (after inflation), industrial production, capacity use, durable goods orders
Housing, ratesHome sales, starts, mortgage rates, yields

Each is published on its own schedule (monthly, weekly, quarterly). Two ways to read them:

  • Change

    m/m (month over month), q/q, y/y (chapter 01, The macro machine).

  • Level against history

    is it near its record high or low, above or below its long-run average?

Seasonal adjustment removes regular calendar patterns (more retail hiring in December). Some series are shown "not seasonally adjusted"; compare them only with the same month in past years.

  1. Agencies publish statistics
  2. Dashboard: latest, previous, date
  3. Chart vs 5Y, 20Y or all history
  4. High, low, mean, target
  5. Reading: hot, cold or normal?

See it in Gloom

Gloom screenshot: ECST with CPI y/y selected
ECST with CPI y/y selected: the indicator list grouped by inflation, labor and growth, then the selected series over 20 years with its high, low, mean and the 2% target. Historical example.

open ittype ECST. / filters statistics; 5Y, 20Y, All set the chart window. Select a row to chart it.

  1. CPI y/y 3.4% prev 3.4% Aug: annual inflation, unchanged on the month. Red when it moved the "bad" way for the economy.
  2. PCE y/y 3.7%, Core PCE y/y 3.3%: the Fed's preferred gauges, above target.
  3. Unemployment 4.1%, Payrolls m/m +162k (prev +21k): jobs growth rebounded.
  4. Real GDP q/q 1.5% (prev 2.1%): growth slowed in Q2.
  5. Chart strip: 1Y ago 2.9%, High 9.1% 2022-06-01, Low -2.1% 2009-07-01; lines at 2% (target) and mean 2.5%.

Practice and recap

Try it3 tasks
  1. Is CPI above or below its 20-year mean? (Above: 3.4% vs 2.5%.)
  2. Which labor number is weekly? (Claims.)
  3. Payrolls went from +21k to +162k. Stronger or weaker labor market? (Stronger.)
Common mistakes4 mistakes
  • Reading one month as a trend.
  • Comparing a non-seasonally adjusted month with the previous month.
  • Forgetting revisions: payrolls and GDP are revised, sometimes a lot.
  • Mixing CPI and PCE: they measure prices differently.
Check yourself3 questions
  1. What is PCE, and why does it matter?
  2. Why compare a statistic with its own history?
  3. What does seasonal adjustment remove?
Answers
  1. The personal consumption expenditures price index, the Fed's preferred inflation measure.
  2. Because a level only means something next to its usual range and its target.
  3. Regular calendar patterns, like holiday hiring.
Words in this lesson6 words
PCE
The personal consumption expenditures price index.
PPI
The producer price index: prices businesses receive.
payrolls
Jobs added in a month.
real GDP
GDP after removing inflation.
capacity use
The share of factory capacity being used.
seasonal adjustment
Removing regular calendar patterns from a series.

Educational material about reading market data, not investment advice.