Your favorite economic indicator? Which one should we be watching?

AuthorBarkey, Patrick M.
PositionINDIANA INDICATORS

IF YOU LIKE TO HEAR news about the economy, then the information age has been a boon. Leave your television set on one of the financial networks and you'll see tickers, graphs and animations whizzing by as talking heads digest and dissect every morsel of market and economic information. Tell your computer to alert you to any news about a company, a country or an industry and it will pop up with tidbits all day long. And for a few bucks, you can subscribe to services that will not only tell you what economic information is going to be released on a given day, but how the experts think it will turn out.

When it comes time to bring all that information back home, and to put it to use in helping your household or business in Indiana prosper, there are at least two ways you can go. We've all learned the hard way that what happens in China, or in bond markets, can impact those of us in the Midwest, so one strategy is to pay attention to all of it. The economy is all interconnected, after all, so even markets and places that you don't know how to pronounce can affect your bottom line.

But few of us really have time for that. Even if we did, the signals sent by different pieces of the economy rarely blend together to tell a coherent story so we must sift and filter the torrent of data that heads our way, picking out the much smaller number of key indicators that have affected our fortunes in the past. Bankers watch interest rates, exporters follow the strength of the dollar, and everyone, it seems, watches the price of gasoline.

It can make sense for communities, regions or even the whole state to pay attention to some pieces of the economy more than others as well. That's nowhere more true than in the industrial Midwest, and especially Indiana, which remains less diversified in its economic base than other parts of the country. The question is, what pieces of the economy should we be paying the most attention to? And how are they doing?

Things were a little simpler in the past. Before the mid-1980s, the U.S. economy went into recession every four or five years on average, and the motor vehicle and housing industries went right down with it. So, it seemed, did the fortunes of just about every Great Lakes state. And so the big story was...

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