Consumer-Related Indicators

Consumer-related indicators show how consumers behave in a crisis. Learn how to use this indicator for successful investing.

Consumer-related indicators show how consumers behave in a crisis. They cannot predict a crisis but show the impact and give information how severe the respective crisis is and when it might be over.

For example, the following indicator can be used: Personal income and outlays, Retail sales, Consumer price index, Unemployment.

Table of Contents

Consumer spending accounts for 70 percent of all economic activity, making it the most significant part of the gross domestic product (value of all goods and services produced in a country). There are different figures to assess consumer spending, and they are published for free by public authorities.

  • The Personal income and outlays statistics are published by the Bureau of Economic Analysis and track personal income and monthly spendings. Personal income is defined as the income of an individual citizen of the US as a dollar value from any source. Personal outlays can be viewed from different perspectives. Generally, they can be divided into durable and non-durable goods and services (goods and services that are consumed). Details for the calculation can be found at the Bureau of Economic Analysis (BEA).
     
  • Retail sales are an indicator of the demand of consumers for finished goods. They indicate the current state of the economy and give a projection on how it may advance.
     
  • The Consumer price index measures changes in the price of the shopping cart (or basket) of a typical inhabitant of a country. It includes consumer goods and services purchased by private households. The Bureau of Labor Statistics calculates it. It is an indicator of inflation in a country. Inflation influences interest rates as well as investment decisions of businesses
     
  • Unemployment
     

All necessary data can be found at the Federal Reserve Bank of St. Louis.

Personal income and outlays can be found in Table 2.6. The Personal Income graph shows that during a crisis the personal income goes down. Therefore, this indicator is retrospective and rather gives an idea when a crisis might be over. It does not predict any crisis.

A graph that shows personal income in the United States of America from 2000 to 2018

Personal consumption expenditures can also be found there. The personal consumption is also a lagging indicator and cannot predict a crisis but rather indicate when a crisis might be over.

A graph that shows personal consumption in the United States of America from 2000 to 2018

Real Personal Consumption Expenditures show the increase of the personal consumption compared to the preceding period. As the other consumer-related indicators it is a lagging indicator that can become negative during a crisis. It rather shows when a crisis is approaching its end.

A graph that shows the real personal consumption in the United States of America from 1950 to 2018

Retail sales can be found at the consensus. It is also a lagging indicator.

A graph that shows the retail sales in the United States of America from 1999 to 2018

The Consumer price index can be found at the Bureau of Labor Statistics. It is a lagging indicator that goes down in the course of a crisis.

A graph that shows the Consumer Price Index in the United States of America
Source: Bureau of Labour Statistics