When you turn on the news or any financial channel they are always going on about how the economy is performing. Sometimes it’s good and other times it’s bad. Also, there is so much misinformation out there it is hard to distinguish who out there is the Chicken Little and who is being upfront and honest about the state of the economy. As a single dad (father) it would be nice to know how well the financial markets are doing from a general standpoint without getting a degree. One way to do this is if you know what the financial market indicators are and also what the key interest rates are as well. Below is list of some of the more important financial indicators and interest rates as well as some short definitions.
The “prime rate” for the banks is what affects how much banks will charge all of their corporate customers to borrow money, which then impacts their profits. The banks will change this prime rate whenever the Federal Government changes its rates. Another thing that prime rates influence are the rates that you would earn on CD’s, what you pay on most of your credit cards, car loans, any lines of credit and home equity loans. To put this in perspective, if the prime rate goes up by ¾ up a percent then, so will the cost of any variable credit cards that you have. It also could have an impact on any interest you pay if you have an adjustable rate mortgage.
The United State inflation rate is the most vital thing the Federal Government will pay attention to. Inflation is the rise in the general level of value of goods and services for an economy for a period of time. If the federal government sees that prices and other signals are about to change then it could raise the rates by ¼ or by ½ to help deal with the threat. Also, on the opposite end of the spectrum it can lower the rates to try and help give the economy a kick start.
Leading economic indicators are issued monthly and these can show up on television or in the newspaper. These are a combination of ten economic indicators to predict what the economy might be like six to nine months from now. Types of indicators can include consumer confidence reports, the level of the S&P index, and jobless claims to name a few. Looking at these is a way to keep track of any trends over a period of time like six months or more so can get a feel for what might happen with the economy.
United States interest rates are another financial market indicator. These can include the Federal Reserve’s discount rate and the federal funds rate. The federal government will dictate these rates and no one else will. It can make the rates higher to slow down the economy by making the borrowing of money considerably more expensive which will them lower stock prices for companies and lower profits for them.
Foreign economies health can also impact the U.S. market believe it or not. Most people do not realize that these economies have a direct impact on your investments and sometimes even your job. The old way it used to be was that the U.S. stock market only reacted to domestic indicators like prices, retail sales, job, and the gross national product (GNP). Unfortunately, that is no longer the norm. If a foreign economy collapses the U.S. stock mare will take a dive as well.
This was just a small sampling of things to look out for when trying to get your finger on the pulse of the country’s financial health. Just being familiar with these things can help you understand how to watch your own finances and determine whether or not you are need of some financial help or financial assistance. When you are a single father (dad) you will want to educate yourself on all things financial so that you can provide the best lives for you and your kids.