c07 JWBT016-Busby October 1, 2008 21:9 Printer: TBD
News Pays 87the financial markets. If the economy is growing too quickly, inflation may
result. If factory orders are dropping, recession may be in the cards.
Durable goods orders tell investors what they can expect from the man-
ufacturing sector. If fewer durable goods are being ordered, factories will
slow down production, which will likely cause a further shrinking of the
overall economy. This report is released at 7:30AMnear the end of each
month. The stock market often responds to this data.
Existing home salesdata is gathered by the National Association of
Realtors and reflects the number of previously constructed homes in which
a sale closed during the month. This group also tracks data about the av-
erage prices of homes. Existing homes account for a larger share of the
housing market than new homes and indicate housing market trends. At
the time of this writing, the housing and mortgage sectors are under stress
and investors are keeping a close eye on both of them.
Housing sales, both existing home sales and new house sales, have a
big effect on the overall economy because house purchases have a huge
rippling effect. When houses are bought, a mortgage is generally secured
so the banking and financial sector is affected. Then there is furniture, ap-
pliances, and other products to buy in order to fix up and furnish the house.
A healthy housing market bodes well for the overall economy. Conversely,
a weak one scares the markets and is evidence that the economy is ailing.
Furniture, appliances, and other consumer goods may sit on showroom
floors instead of making their way out of the door of manufacturers and
distributors and into homes across America.
Gross domestic product (GDP)is the broadest measure of aggregate
economic activity. This is a government-generated report, and it is one of
the best indicators of the overall health of the economy because it encom-
passes consumer spending, business and residential investment, and price
indexes. If there is growth or shrinkage in the U.S. economy, this report
will capture the data. This report is released at 7:30AM.
Like the CPI, the GDP has the power to be a big market mover. Mark
this one on the economic calendar and be ready to watch the markets and
see how they respond to it. This data is important for government, busi-
ness, consumers, and traders.
Housing startsmeasure the initial construction of residential units
each month. This report is important for a number of reasons, including
the demand for building products, construction labor, appliances, furni-
ture, and the like. Housing construction has a major ripple effect on the
economy. That makes this report important for traders and investors.
New home salesmeasures the number of newly constructed homes
that have sold during the month. The level of new home sales indicates
housing market trends. Like housing starts, this data may also result in
a ripple effect in the economy because those new home buyers need