If you run a business, it’s easy to feel whiplash from the headlines.
Is a recession coming or not? Are rates going up again? Are we “cooling” or “recovering”?
Sometimes, the news makes you feel like you’ll never learn how to read the economy and the only thing you can count on is uncertainty.
But the truth is—there are ways to track what’s really happening in the economy. You don’t need a PhD in economics or a Bloomberg terminal. You just need to know which signals to pay attention to—and how they relate to the decisions you’re making inside your business.
Here are the 10 economic indicators I keep an eye on—and recommend every business owner understand.
1. Inflation Rate
Inflation tells you how much your money buys. High inflation shrinks margins. If inflation is slowing (even slightly), that’s often a green light to revisit pricing or hiring plans.
2. Federal Funds Rate
This is the rate the Fed uses to control borrowing costs. It impacts everything from credit card interest to commercial loans. If you’re planning to borrow, watch this closely.
3. Consumer Price Index (CPI)
CPI measures price changes in goods and services. If CPI is rising faster than your pricing, it might be time to reassess cost controls or sourcing strategies.
4. Unemployment Rate
Low unemployment is good for the economy, but it also makes hiring competitive and expensive. Rising unemployment often signals softening demand.
5. Job Openings and Labor Turnover (JOLTS)
This one’s less known, but valuable. It tells you how much labor movement is happening. Are people quitting jobs? Are companies hiring or holding back?
6. Wage Growth
If wages are rising faster than your revenue, you may need to rethink your comp structure or get ahead with automation and efficiency.
7. Consumer Sentiment Index
This reflects how confident people feel about the economy. If confidence drops, consumers spend less. If it rises, it’s often a leading indicator of growth.
8. Retail Sales Data
This shows how much money people are actually spending. It can be a preview of demand patterns, especially in B2C industries.
9. GDP Growth
Think of GDP as the big picture. It reflects how fast the economy is growing overall. You don’t run your business based on GDP, but it sets the tone.
10. PMI (Purchasing Managers’ Index)
PMI tracks how optimistic supply chain managers are. A rising PMI can be a sign of expanding demand; falling PMI may point to a slowdown.
Why These Matter for Your Business
“You don’t need to be an economist, but you do need to understand what’s moving around you.”
— Boris Benic, CPA
When we work with clients, especially growth-mode companies, we don’t just look at their numbers. We look at the bigger picture so we can make informed decisions about:
- Timing new hires
- Adjusting pricing
- Choosing financing strategies
- Planning capital investments
You don’t need to obsess over every number every week. But tracking a few of these indicators each month will help you stay grounded in fact, not fear.
Final Thought
The economy isn’t a mystery, it’s a system. And once you know where to look and how to read the economy, you can stop reacting and start leading.
If you’d like help applying this kind of thinking to your business, from forecasting cash flow to planning for interest rate changes—we’re here for that.
Let’s look at your business and the economic factors affecting it together, and build a plan that works for both.