Business leaders pay attention to the economy, as they should. But they often focus on the wrong issues, not the ones that merit the greatest attention. And many feel guilty that they do not pay more attention to the economy, despite many other demands on their time. Executives and small business owners, however, can focus on a few key economic issues and ignore the rest. They will benefit not only by saving time, but also by being less distracted by irrelevant news.
The most misleading news tries to capture the reader’s attention with fear. Humans are trained by evolution to be alert to danger, and news editors use this. If a measure such as employment ticks down one month, headlines scream about the downturn. If the data had ticked up, then down, then up again and then down again, a simple chart would show it was within a steady range. The variation could have been due to normal sampling errors and survey participants’ data errors. But that news won’t capture eyeballs, so the media tend to focus on any hint of bad news. Small pieces of good news—within the range of normal variation—can also be over-emphasized to gain attention.
Keeping Up With General Economics
Business leaders can invest just a little time to get the information they need in a useful format, with structure that avoids fads and scary headlines. A little organization of the data will go a long way.
First, a sense of the overall economy’s current state and outlook should top the business leader’s radar screen. Key concepts are general economic activity, inflation and interest rates. For economic activity, employment is the best monthly measure. Those who want to look at data only quarterly can follow gross domestic product (GDP), which is a broader measure. Inflation is usually measured with the consumer price index (CPI). Interest rates should include a short-run measure, such as the federal funds rate or the 3-month treasury bill rate. A long-term interest rate should also be monitored, either the 10-year treasury bond rate or the 30-year fixed rate mortgage.
All economic measures have drawbacks. Neither the CPI nor GDP is perfect, but they perform well for ballpark views. Stick to common measures, focus on the broad trends, and ignore the small variations.
One can monitor the usual news sources, or set up alerts through news sites, or build very simple spreadsheets to download the data. The FRED app, from the Federal Reserve Bank of St. Louis, makes updating data free and easy. AI can easily create the spreadsheet as well as update it monthly.
Economic forecasts are not perfect, but they bear monitoring. Usually they are calmer than news headlines. A useful compilation is available for free from the Federal Reserve Bank of Philadelphia’s Survey of Professional Forecasters. Another compilation is available to Wall Street Journal subscribers.
I have prepared a guide to data sources describing the series that I use for my monthly newsletter.
Industry Economics
Most business leaders should follow trends in their own industry. In some cases, government data will help. Finding it is challenging to those not familiar with our various statistical agencies. Searching the FRED database is an easy first step.
Industry publications will usually report statistics, either from government sources or private data providers. Industry news articles may also highlight some useful relationships. For example, home furnishing sales usually rise after an increase in home sales, even though furnishings and real estate transactions are different industries.
Local Area Economics
Business leaders whose companies serve local markets should follow their local economies, but also keep in mind that most local changes are driven by national trends. The overall U.S. economy is more important, in most cases, than local events.
Much of the state and local area economic data are collected by federal agencies. The most closely watched are employment and unemployment; home sales, construction and prices; and population. Again, the FRED database is a good first place to look. Commercial real estate information is disseminated by private firms but generally available for free.
Supply-Side Economic Issues
Most economic inputs focus on demand fluctuations: Do consumers have jobs, and thus income? Are businesses buying equipment and materials? Is the government signing contracts for projects? However, supply side problems impact both the global economy and specific industries. Recent research has highlighted the role of supply shocks in recessions over a long spell of history.
For general economic conditions, the main supply triggers for downturns have been finance, oil and labor. For financial conditions, the Federal Reserve system surveys bank loan officers on their credit decisions. The market for risky debt also provides clues. The spread between interest rates on risky bonds and the interest rate on treasury bonds measures the market’s appetite for risk.
Oil prices are widely reported. They mostly should be ignored by executives who don’t buy or sell the product, except when they rise sharply. The spike in 2026 when the Iran War began is a good example of when to watch oil prices—though no recession signs have yet arisen as of this writing.
Labor issues reflect major strikes, though they are less pronounced now than in the previous century. They can, however, have serious local consequences when a major company’s employees don’t go to work.
In past centuries bad crop years have caused recessions, but today that does not happen in the United States. We have bad crop years, for sure, but we can buy the food and feed we need from other countries.
Supply shortages are more common in particular industries. Companies using specialized products should understand how reliable their supplier base is and what risks their suppliers face.
Planning With Economic Statistics
Corporate executives and small business owners can reduce their stress levels by setting up an economic dashboard of data to monitor, and then ignoring most other news and commentary. It can be a fairly brief task, performed monthly, giving confidence that the most important topics have been monitored. Freeing up the business leader’s time and attention provides great value to any business.
