Law Firm Intelligence: Researching the Economy Part III: The Big Picture

While the macroeconomics is more than a little intimidating, the good news is that researching the economy is not a complicated task. In fact, it can be much more straightforward than internal financial research (covered in the first part of this series) and research on the financial health of companies and industries (covered in the second part of this series). In this, the third and final part in the Researching the Economy series, I focus on a few key sources for macroeconomic information.

Free Government Sources

Although there are sources of proprietary information and analysis in the marketplace, I have chosen to address the free government sources publicly available on the Internet. While the private sector has excellent research and analysis ' and by all means, search through the fantastic reports on the McKinsey, Deloitte and PwC Web sites ' I have found that for the broadest questions, government sources provide the best answers. Firms such as PwC, on the other hand, provide excellent insight into industry or practice group specific inquiries (for example: M&A trending in the biotech industry). When I receive broad, “What is the economy doing today?” questions, I have three go-to sources that have always provided the information I have needed: The Federal Reserve, the Bureau of Labor Statistics and the Bureau of Economic Analysis.

The Federal Reserve

www.federalreserve.com

According to the Federal Reserve Act, The Federal Reserve is responsible for monetary policy, dealing with bank panics, acting as the U.S. central bank and regulating the banking industry, among other duties. To better understand The Fed, begin with The Federal Reserve System; Purposes & Functions. This 146-page document is available online and explains, in depth, the institution, its mission and duties. Alternatively, there is an interactive presentation, Fed 101, that provides a brief overview.

Additionally, The Fed has made available on its Web site statistics, reports, press releases and testimony related to the institution's activity.

The Fed Monetary Policy Report, Testimony and Speeches are included in the “News & Events” section of the Web site. For example, Chairman Bernanke's testimony before Congress on the nation's economic outlook is located in this section. Under the “Monetary Policy” tab, one can find information pertaining to how The Fed has dealt with the financial crisis, specifically the institution's credit and liquidity programs.

To provide information on foreclosures around the U.S., The Fed has an interactive map of mortgage delinquencies in its “Economic Research & Data” section. While this section offers a wealth of statistics, surveys, white papers and reports, much of it is quite dense and requires a background in economics. It is not for the layperson, although it does provide excellent raw data points to enhance presentations and reports.

Bureau of Labor Statistics

http://www.bls.gov/

The Bureau of Labor Statistics was created in 1884 for the purpose of providing statistical data related to employment and labor. The BLS provides information in four main categories: Employment and Unemployment, Compensation and Working Conditions, Productivity and Prices. Additionally, each category has a link to international comparison data.

Employment & Unemployment

The BLS issues two highly anticipated monthly press releases titled Mass Layoffs, and Regional and State Employment and Unemployment. They are available on the BLS homepage, and are usually released three to four weeks after the reporting period closed. For example, the most recent data is for April, and was released on May 22.

The Mass Layoff release lists the number of layoff actions, as well as the number of people laid off. Further, the release lists the percentage of workers unemployed (8.9% for April, 2009). The report also provides some analysis on the rate of change of layoffs, and the cumulative total.

The Regional and State Employment and Unemployment release compares changes in employment on state and regional levels. States with the greatest changes are listed, along with the rate of increase or decrease in employment. Finally, a table of every state's unemployment rate is provided at the end of the release.

Additionally, the BLS has online searchable databases that provide granular detail on employment growth within occupations, salary by education level, and industry employment data. Last, in 2007, the BLS published, “Employment Outlook: 2006-2016,” which provides projection and analysis of the U.S. economy and its relation to employment levels.

Compensation and Working Conditions

The Pay & Benefits section to the BLS Web site offers the following statistics and reports:

• Employment Costs Trends, which is a quarterly report detailing the change in employment costs and the costs per hour worked.
• National Compensation Data, which lists indices for earnings and cost trends in metropolitan areas.
• Other research, including: Wages by Area and Occupation, Earnings by Demographics and Earnings by Industry.

Productivity

The BLS states, “Productivity and related cost measures ' are used to forecast and analyze changes in prices, wages, and technology.” The section of the Web site offers searchable databases, as well as comparisons of different industries and some analysis. Perhaps the most interesting press release, “International Comparisons of Manufacturing Productivity and Unit Labor Cost Trends 2007,” compares the U.S. to other countries around the world, and analyzes U.S. competitiveness globally. Further, the release cites its data, so that a researcher can delve further into a specific country's statistics. Note, though, that this data is for 2007. Much has changed since then.

The Gross Domestic Product, or GDP, is “the value of all market and some non-market goods and services produced within a country,” according to the BLS. The site provides comparative data for 16 countries from 1960 through 2007, along with a thorough description of its methodology. Real-time data, however, is not available.

Prices

The BLS reports on the Consumer Price Index, Producer Prices Indexes, Import and Export Prices, Employment Cost Trends, and Contract Escalation (a study of the relationship between the CPI and costs of such things as rent and wages). The CPI is given for all urban consumers (which is the version most leveraged by the media) and for urban wage earners and clerical workers, and each is broken down according to expenditure category and commodity and service group (food, shelter, clothing, etc.). There is also a CPI inflation calculator available.

The Bureau of Economic Analysis

www.bea.gov

The Bureau of Economic Analysis (BEA) is an excellent catch-all resource for research on the economy. Where the BLS and The Fed provide searchable databases and raw statistics, the BEA gives accessible information quickly. The “U.S. Economy at a Glance” link provides a thorough overview of how the U.S. economy is performing, in terms of GDP, national income, prices and personal income. Other information available on the site includes:

• Real-time GDP figures with analysis, including discussion of annual changes from 1930 and quarterly changes from 1947 and GDP by industry statistics are provided.
• Studies of personal income and personal consumption, including wage and salary information. This differs from the BLS in that the BLS provides wage information per region and industry, whereas the BEA provides dollar amounts and percentages of change in aggregate. Further, the BEA breaks out disposable income and savings. These statistics are often reported in the media.

Corporate profits are key to measuring the health of the economy, and the BEA reports not only profits, but also taxes, domestic vs. international profits, and funds available for investment, among other data points.

The Bureau of Economic Analysis is a great resource for trending information. The researcher can quickly provide information that details economic performance over a period of time. However, where more detailed data is needed, The Fed and the Bureau of Labor Statistics provide thousands of data points that can be mined by the research professional. While researching the economy may, at first glance, seem overwhelming, breaking down the inquiry into the various aspects of macroeconomics ' such as employment and GDP ' and then targeting the sources that report on those, makes for a relatively straightforward research task.

Shannon Sankstone, a member of this newsletter's Board of Editors, is the Marketing Research Analyst at Quarles & Brady, where she is responsible for the marketing and competitive intelligence research function. She can be reached at [email protected] or at 312-715-5251.

While the macroeconomics is more than a little intimidating, the good news is that researching the economy is not a complicated task. In fact, it can be much more straightforward than internal financial research (covered in the first part of this series) and research on the financial health of companies and industries (covered in the second part of this series). In this, the third and final part in the Researching the Economy series, I focus on a few key sources for macroeconomic information.

Free Government Sources

Although there are sources of proprietary information and analysis in the marketplace, I have chosen to address the free government sources publicly available on the Internet. While the private sector has excellent research and analysis ' and by all means, search through the fantastic reports on the McKinsey, Deloitte and PwC Web sites ' I have found that for the broadest questions, government sources provide the best answers. Firms such as PwC, on the other hand, provide excellent insight into industry or practice group specific inquiries (for example: M&A trending in the biotech industry). When I receive broad, “What is the economy doing today?” questions, I have three go-to sources that have always provided the information I have needed: The Federal Reserve, the Bureau of Labor Statistics and the Bureau of Economic Analysis.

The Federal Reserve

www.federalreserve.com

According to the Federal Reserve Act, The Federal Reserve is responsible for monetary policy, dealing with bank panics, acting as the U.S. central bank and regulating the banking industry, among other duties. To better understand The Fed, begin with The Federal Reserve System; Purposes & Functions. This 146-page document is available online and explains, in depth, the institution, its mission and duties. Alternatively, there is an interactive presentation, Fed 101, that provides a brief overview.

Additionally, The Fed has made available on its Web site statistics, reports, press releases and testimony related to the institution's activity.

The Fed Monetary Policy Report, Testimony and Speeches are included in the “News & Events” section of the Web site. For example, Chairman Bernanke's testimony before Congress on the nation's economic outlook is located in this section. Under the “Monetary Policy” tab, one can find information pertaining to how The Fed has dealt with the financial crisis, specifically the institution's credit and liquidity programs.

To provide information on foreclosures around the U.S., The Fed has an interactive map of mortgage delinquencies in its “Economic Research & Data” section. While this section offers a wealth of statistics, surveys, white papers and reports, much of it is quite dense and requires a background in economics. It is not for the layperson, although it does provide excellent raw data points to enhance presentations and reports.

Bureau of Labor Statistics

http://www.bls.gov/

The Bureau of Labor Statistics was created in 1884 for the purpose of providing statistical data related to employment and labor. The BLS provides information in four main categories: Employment and Unemployment, Compensation and Working Conditions, Productivity and Prices. Additionally, each category has a link to international comparison data.

Employment & Unemployment

The BLS issues two highly anticipated monthly press releases titled Mass Layoffs, and Regional and State Employment and Unemployment. They are available on the BLS homepage, and are usually released three to four weeks after the reporting period closed. For example, the most recent data is for April, and was released on May 22.

The Mass Layoff release lists the number of layoff actions, as well as the number of people laid off. Further, the release lists the percentage of workers unemployed (8.9% for April, 2009). The report also provides some analysis on the rate of change of layoffs, and the cumulative total.

The Regional and State Employment and Unemployment release compares changes in employment on state and regional levels. States with the greatest changes are listed, along with the rate of increase or decrease in employment. Finally, a table of every state's unemployment rate is provided at the end of the release.

Additionally, the BLS has online searchable databases that provide granular detail on employment growth within occupations, salary by education level, and industry employment data. Last, in 2007, the BLS published, “Employment Outlook: 2006-2016,” which provides projection and analysis of the U.S. economy and its relation to employment levels.

Compensation and Working Conditions

The Pay & Benefits section to the BLS Web site offers the following statistics and reports:

• Employment Costs Trends, which is a quarterly report detailing the change in employment costs and the costs per hour worked.
• National Compensation Data, which lists indices for earnings and cost trends in metropolitan areas.
• Other research, including: Wages by Area and Occupation, Earnings by Demographics and Earnings by Industry.

Productivity

The BLS states, “Productivity and related cost measures ' are used to forecast and analyze changes in prices, wages, and technology.” The section of the Web site offers searchable databases, as well as comparisons of different industries and some analysis. Perhaps the most interesting press release, “International Comparisons of Manufacturing Productivity and Unit Labor Cost Trends 2007,” compares the U.S. to other countries around the world, and analyzes U.S. competitiveness globally. Further, the release cites its data, so that a researcher can delve further into a specific country's statistics. Note, though, that this data is for 2007. Much has changed since then.

The Gross Domestic Product, or GDP, is “the value of all market and some non-market goods and services produced within a country,” according to the BLS. The site provides comparative data for 16 countries from 1960 through 2007, along with a thorough description of its methodology. Real-time data, however, is not available.

Prices

The BLS reports on the Consumer Price Index, Producer Prices Indexes, Import and Export Prices, Employment Cost Trends, and Contract Escalation (a study of the relationship between the CPI and costs of such things as rent and wages). The CPI is given for all urban consumers (which is the version most leveraged by the media) and for urban wage earners and clerical workers, and each is broken down according to expenditure category and commodity and service group (food, shelter, clothing, etc.). There is also a CPI inflation calculator available.

The Bureau of Economic Analysis

www.bea.gov

The Bureau of Economic Analysis (BEA) is an excellent catch-all resource for research on the economy. Where the BLS and The Fed provide searchable databases and raw statistics, the BEA gives accessible information quickly. The “U.S. Economy at a Glance” link provides a thorough overview of how the U.S. economy is performing, in terms of GDP, national income, prices and personal income. Other information available on the site includes:

• Real-time GDP figures with analysis, including discussion of annual changes from 1930 and quarterly changes from 1947 and GDP by industry statistics are provided.
• Studies of personal income and personal consumption, including wage and salary information. This differs from the BLS in that the BLS provides wage information per region and industry, whereas the BEA provides dollar amounts and percentages of change in aggregate. Further, the BEA breaks out disposable income and savings. These statistics are often reported in the media.

Corporate profits are key to measuring the health of the economy, and the BEA reports not only profits, but also taxes, domestic vs. international profits, and funds available for investment, among other data points.

The Bureau of Economic Analysis is a great resource for trending information. The researcher can quickly provide information that details economic performance over a period of time. However, where more detailed data is needed, The Fed and the Bureau of Labor Statistics provide thousands of data points that can be mined by the research professional. While researching the economy may, at first glance, seem overwhelming, breaking down the inquiry into the various aspects of macroeconomics ' such as employment and GDP ' and then targeting the sources that report on those, makes for a relatively straightforward research task.

Shannon Sankstone, a member of this newsletter's Board of Editors, is the Marketing Research Analyst at Quarles & Brady, where she is responsible for the marketing and competitive intelligence research function. She can be reached at [email protected] or at 312-715-5251.