What the Glossary?

Economic Indicators

Balance of Payments (BOP): measures all the transactions between entities (individuals, firms, government bodies) in one country with the rest of the world, over a time period (typically monthly, quarterly or annually). The BOP contains two large components: the current account (a country’s net income) and the capital account (change in ownership of national assets). The largest contributor to the BOP is the Balance of Trade (BOT). The BOP is a crucial factor in the demand and supply of a nation’s currency and a great indicator of a country’s level of international economic competition.

Balance of Trade (BOT): measures the difference between the value of a nation’s exports and imports for a given time period. The difference between goods and services may be presented as separate figures. The BOT is the largest component of a country’s Balance of Payments (BOP). The BOT may also be referred to as the trade balance, commercial balance or net exports. The BOT can also be used as a proxy for international economic competition and secondly as a measure of local development.

Chicago Fed’s National Activity Index (CFNAI): monthly index to evaluate the overall economic activity and related inflationary pressure. The CFNAI is a diffusion index that weighs 85 monthly indicators of national economic activity. A figure above 50 means the economic trend is positive. The higher the figure, the stronger the positive tendency. A figure below 50 means the trend is negative.

Consumer Confidence Index (CCI): monthly survey conducted by the Conference Board gauging prevailing business conditions and household’s consumer attitudes regarding their expected financial situation. The index is typically used as a bellwether of US economic health based on consumer perception, and is divided into a Present Situation Index and an Expectations Index focused on short-term outlook.

Consumer Price Index (CPI): measures the average change in prices for a basket of goods and services over time (aka inflation!)

Consumer Sentiment Index (CSI): reflects business conditions as determined by consumer opinion, including how the public feels about their personal finances, and the direction of the economy in the short and long term. 

Federal Reserve’s Beige Book: summary of commentary by the 12 Federal Reserve Districts on the current state of economic conditions. The report is published 8 times per year, and gathers data from Bank and branch directors, as well as economists, market experts and key business contacts for the district. The information is summarized by district and sector.

Federal Open Market Committee Minutes (FOMC Minutes): detailed record of the FOMC meeting offering insight into the current stance on monetary policy, and may help anticipate interest rate decisions that may follow in the near future. The minutes are typically published up to three weeks after the scheduled meeting, and are subsequently published in the board’s annual report.

Johnson Redbook Index: the Redbook Index monitors trends in retail sales and the consumer economy. The index measures, compares and estimates same-store sales growth in a sample of large US general merchandise and apparel retailers of roughly 9,000 stores across the nation.

NFIB Business Optimism Index: a monthly composite of ten small business economic indicators regarding the state of the small business economy. The index includes: time to expansion, general economic outlook, expected sales, earnings, planned capital outlays, current and prospective job openings, inventory status and expectations, and expected credit conditions.

Producer Price Index (PPI): measures the average selling prices movement of domestic production over time. Summarizes market conditions as viewed by purchasing managers. The PMI is compiled by the Institute for Supply Management and presented monthly.

Purchasing Managers’ Index (PMI): monthly index of the prevailing direction of economic trends in manufacturing and services. Summarizes purchasing managers’ view of current and future market conditions. A reading over 50 indicates expansion, while a reading under 50 suggests contraction. ISM, and Markit separately compile the monthly surveys. ISM covers all NAICS categories, while Markit focuses on private sector companies.

Retail Sales Report: monthly report issued by the US Census Bureau published in its Monthly Retail Trade Survey. Considered a crucial economic indicator of economic health, as retail accounts for roughly two thirds of America’s GDP. The report portrays the total number of sales in the period and the percentage change vs the prior report. It is important to remember the report includes year over year (YoY) change and that sales account for seasonality (e.g., Q4 holiday season is largely affected). Additionally, sales figures may be presented with and without auto and gas sales, as those tend to fluctuate more than other sectors.

Richmond Fed’s Manufacturing Index: monthly survey issued by the Federal Reserve Bank of Richmond on manufacturing activity across the fifth district (DC, MD, NC, SC, VA and WV). The survey covers key data regarding shipments, new orders, backlogs, capacity utilization, lead times, average work weeks, wages, inventories and capital expenditures, as well as expectations for the following six months. The Fed then transforms the data into a diffusion index.

Total Market Index (Buffett Indicator): the Total Market Index, commonly known as the Buffett Indicator is a long-term valuation metric popularized by Warren Buffett in 2001, who defined it as the “best single measure of where valuations stand.” The Index measures the market capitalization of all public companies in a country to the Gross Domestic Product (GDP) of a country. Roughly used, a measure within 1 standard deviation from the historical average is “fairly valued”, between one and two standard deviations from the mean represents under/over valuation, while over two standard deviations represents a strong under/over valuation.

Nominal Interest Rate: Actual interest rate paid by a borrower, not accounting for inflation or additional costs (i.e. lending fees). The ferderal funds rate (interest rate set by the Federal Reserve) is also known as the nominal interest rate. The base reference for nominal interest rates is typically set by the fluctuation of 10 Year Treasury bonds.

Real Interest Rate: Interest rate adjusted by inflation; used to relfect the real cost of borrowing, and the real yield for the issuer. Calculated as the difference between the nominal interest rate and the expected (or sometimes actual) inflation rate.


European Central Bank (ECB): is the Eurozone’s Central Bank, established by the Treaty of Amsterdam in 1997 and headquartered in Frankfurt. Its mandate is to maintain price stability within the Eurozone, setting and implementing monetary policy.

The Federal Reserve (the Fed): is the U.S. Central Bank. The Fed has a dual mandate to “keep our money valuable and our financial system healthy.” The Fed accomplishes this through monetary policy which ensures that lenders and borrowers can access money and credit, balancing it through interest rate adjustments to regulate inflation. Jerome Powell is the current chairman of the Fed and Federal Open Markets Committee (FOMC).

Federal Open Markets Committee (FOMC): A branch of the Federal Reserve that determines monetary policy directing open market operations, discount rates and reserve requirements. The committee is made of 12 members including: the 7 members of the Board of Governors of the Federal Reserve System, the President of the NY Federal Reserve Bank, and four of the remaining eleven Reserve Bank Presidents. The FOMC meets 8 times per year and reviews economic and financial conditions to determine the appropriate stance on monetary policy and the risks to long-term goals of the Fed’s dual mandate.

Organization of the Petroleum Exporting Countries (OPEC): is an intergovernmental organization of 13 nations founded in 1960 headquartered in Vienna, Austria. Its members account for approximately 44% of global oil production and roughly 81.5% of global proven oil reserves. Its mission is to “coordinate and unify petroleum policies and ensure oil market’s stability to ensure efficient, economic and regular supply of petroleum.”

The Treasury Department: is in charge of collecting taxes, managing government revenue and literally, printing money. The Treasury Secretary also acts as a principal economic advisor to the President. Janet Yellen is the current Treasury Secretary


Authorized Shares: Authorized shares are the most shares a company can issue. However, companies are not required to issue all of their shares at once.

Company Float: The amount of shares available for buying and selling by the general investing public. Calculated by taking the outstanding public shares of a company less any restricted shares (e.g., a CEO has 5,000 shares but is not allowed to sell them for 12 months after the IPO) and authorized shares.

Dove: In economics, a dove or dovish commentary refers to the advocacy and support of low-interest rates and expansionary monetary policy. Doves typically prioritize short-term job creation and economic growth over long-term inflationary risks.

Fungible: the property of a good or a commodity whose individual units are essentially interchangeable, and each of its parts is indistinguishable from another part.

Hawk: In economics, a hawk or a hawkish commentary refers to the advocacy and support of tight monetary policy. Hawks prefer to use interest rates to reduce recession risks triggered by high inflation rates.

Outstanding Shares: The shares that are issued by a company and are held by all of its investors. This includes Restricted shares. Outstanding shares may vary over time, as more shares can be issued or bought back.

Restricted Shares: Shares of a company issued to insiders; these are typically regulated by the Securities and Exchange Commission limiting transferability.

Special Purpose Acquisition Company (SPAC): Also known as blank-check companies, promise investors to find an appropriate investment over a period of time in a specific sector/industry. Fundamentally, it’s a shell company, put together for the express purpose of raising money to acquire private companies that will eventually be taken public. These companies have no commercial operations and are restricted to raise capital for the sole purpose of acquiring an exisiting company.