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Q: I'm constantly hearing about economic indicators in the news, but I'm never sure what they're talking about. What are economic indicators and why are they important? A: An economic indicator is simply any economic statistic, such as the unemployment rate, GDP, or the inflation rate, which indicate how well the economy is doing and how well the economy is going to do in the future. As shown in the article " How Markets Use Information To Set Prices " investors use all the information at their disposal to make decisions. If a set of economic indicators suggest that the economy is going to do better or worse in the future than they had previously expected, they may decide to change their investing strategy. To understand economic indicators, we must understand the ways in which economic indicators differ.
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