If you have no idea what CPI, PMI, or ECI mean, then you are like most beginning investors. Let me explain these and a few others terms to enhance your knowledge of indicators that affect your investments.
Economic indicators are used by the Federal Reserve to monitor inflation. When they reflect inflationary pressure, the Fed will increase interest rates. Conversely, when they show signs of deflation, a decrease of interest rates becomes imminent.
Interest rates are important for the economy because they influence the willingness of individuals and businesses to borrow money and make investments. An increase of interest rates will cause a downturn in the economy, while a decrease will fuel an expansion.