RELEVANCE, TIMELINESS AND RELIABILITY

The most relevant, timely and reliable indicators have the biggest effect on the market. Retail sales figures are considered relevant, for example, because consumption spending represents two-thirds of total U.S. economic activity. Markets always want the latest news, so indicators that reflect the most current data, such as the Institute for Supply Management (ISM) Survey released on the first day of the month and reflecting the month just past, could have a greater impact than the final quarterly report on economic growth (change in Gross Domestic Product, or GDP) which is released three months after the end of the quarter it reflects.

As for reliability, some figures, such as new, single-family home sales, are subject to large subsequent revisions are too changeable for valid comparisons. Other indicators also show wide swings from report to report, compelling analysts to “smooth” the data using moving averages to discern trends.