Prudent investing takes more than detailed knowledge about different types of investment strategies. It also requires a clear understanding of the economy and how it works. Following are descriptions of some of the more important economic reports that we believe everyone should know.

Gross Domestic Product (GDP): Provided quarterly by the Bureau of Economic Analysis, GDP offers the proverbial “big picture” on the U.S. economy. It measures the value of all goods and services produced in the United States during a calendar year minus exports, government spending and products made by U.S. companies in foreign markets.

When GDP increases, the economy is said to be growing or expanding. When GDP declines, the economy is said to be slowing or decelerating. When GDP declines for two consecutive quarters, many economists consider the economy to be in recession.

Consumer Confidence Index: This index gives a good sense of how Americans feel about the current economic environment and about their future expectations. The index is published monthly by the Consumer Research Center of the Conference Board and is based on a representative sample of 5,000 U.S. households.

When people are positive about the economy, the index tends to go up. When they are pessimistic, it tends to decline. A rise or decline in the Consumer Confidence Index can have a major effect on the way Americans spend money. This can impact the economy at large since consumers make up about 2/3 of U.S. economic activity.

Employment Cost Index: This index is used to monitor inflation by measuring changes in labor costs for money wages and salaries. It also measures non-cash fringe benefits in non-farm private industry and in state and local government. It is provided quarterly by the Bureau of Labor Statistics.

Index of Leading Economic Indicators (LEI ...