Everyone from investors to economists to policymakers closely monitor US economic indicators, in the hope of anticipating economic downturns and taking advantage of improving conditions. These economic indicators provide insight into both the current health of the economy, and how it's likely to perform in the near future. But even if current economic indicators suggest one state of affairs, that could change at a moment's notice, and economic experts know it's also crucial to stay flexible in your interpretation of the situation.

There are three kinds of key economic indicators:

1. Leading economic indicators (those that change before the economy changes)
2. Lagged economic indicators (those that change after the economy changes)
3. Coincident economic indicators (those that move at the same time as the economy)
   

Action Steps
The best contacts and resources to help you get it done

Pay special attention to US economic indicators published by the federal government

The US government tracks everything from retail spending to gross domestic product to unemployment rates. If you're looking for a snapshot of the US economy, your best source of information is probably the regularly updated reports and data published by various government agencies.

I recommend: Monitor the gross domestic product through updates published by the Bureau of Economic Analysis. Search for current unemployment rates by state at CNNMoney.

Watch out for inflation by observing the retail price index

The retail price index, or RPI, is the official measure of the level of inflation. RPI statistics measure the change in the cost of a basket of retail goods, and on services such as energy and transportation costs. There are several types of RPI inflation statistics, such as the consumer price index, or CPI. This economic index is generally computed monthly, but is also figured annually, and this data is used to adjust things like wages, salaries and pensions.

I recommend: Monitor the current CPI, and find out when the next month's data is set for release, at the U.S. Department of Labor's Bureau of Labor Statistics. Find out the impact of inflation on prices by using the inflation calculator at the Federal Reserve Bank of Minneapolis website.

Monitor global economic indicators

Most people pay attention to what's going on close to home; after all, this is what directly affects their ability to get a job and keep gas in the car. However, economic conditions clear across the globe may have just as much--or more--impact. Often these situations make their way around the entire world, so by staying informed of what's happening in China or the Middle East, for example, you may get a heads-up on the economic climate you'll soon see in your own region.

I recommend: At the Federal Reserve Bank of New York website, search by country or by subject for real-time information on economic indicators in countries around the world. At Dismal Scientist, search for real-time information and analysis on international economic indicators.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  If you're monitoring economic indicators, make sure you know how frequently they're published. The gross domestic product, for example, is usually published quarterly, while unemployment rates are published monthly. If you're basing business decisions on these statistics, it's essential that you're using the most current data available.