Economic indicators come in all forms. My favorite is called my gut or my intuition but since I can’t pass that
on, I’ll share a few useful ones that you should know about.
Around the time I was graduating, the Big Mac Index was born. The idea is simple. What would certain currencies be worth if the price of a Big Mac was the same everywhere?
Quality control makes it work. Big Macs are nearly identical everywhere you go so if they cost 4 dollars here in the U.S. and 3 euros abroad, the rate of exchange could be stated as 1 dollar = 0.75 euro.
The fluctuating price of a hamburger can indicate if one currency is overvalued or undervalued.
Arizona is the Copper State and Copper Prices are another leading indicator of economic health. Higher copper prices are indicative of economic expansion as copper is a very cost-effective conductor of electricity. It is used in wiring homes and offices, automobiles, electric appliances and many of our beloved tech gadgets.
With copper, it’s important to watch the trendline. Certain global events can surprise the market without being a good indicator of economic expansion or retraction. Remember to watch the overall direction rather than a single price change.
Indicators are intriguing and invaluable to what I do.
Until next week,
Susan R. Linkous
The National Association of Board Certified Advisory Practices (NABCAP) will be announcing their selection for Arizona in a few weeks. The Linkous Group, Ltd. made the cut in 2011. We hope to be there again. You can show your support at www.nabcap.org.
Quote of the Week:
“Never look back unless you are planning to go that way.” ~Henry David Thoreau
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