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Do Economic Indicators Really Have to Be So Complicated?

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May. 2 2019, Published 4:18 p.m. ET

Making sense of economics

Let’s face it. Economics is boring or at least it appears to be. The field of economics hasn’t done a great job at making economics accessible to all, so it can sound like Greek and Latin to most people. Actually, economics is derived from two Greek words: Oikos, which means “household,” and Nemo, which means “to manage.” So economic is literally the science or art of household management. In this series, we’ll attempt to restore that definition by making economic indicators a lot more relatable.

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First thing’s first

The field of economics is roughly divided into two categories: microeconomics, which focuses on individuals and companies, and macroeconomics, which focuses on economies. Thus, how companies make economic choices falls under microeconomies and how economies (SPY) behave falls under macroeconomics. Our focus throughout this series will be on the latter.

Economic indicators come in different forms. Some give an indication of what may happen to the economy (leading indicators), some move with the economy (coincidental indicators), and others happen as an outcome of an economic trend or pattern (lagging indicators).

For the purpose of this series, our focus will be the leading indicators as they are the most important for gauging where the economy is headed.

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