Widely publicized economic indicators track the national economy. Local economic growth can often be tracked with real estate activity.
News Reports Highlight the Past
Economic activity is widely followed with a number of monthly reports that track a variety of indicators. Unemployment and several inflation reports are analyzed in detail each month, while industrial production and many other indicators attract little attention beyond the financial news.
All of these reports require a great deal of data collection and the process of obtaining final data from all around the country takes several months. The data that is in the news reports is revised several times and these revisions are usually not noted in the press, even though they are more accurate than the initial estimates.
While unemployment and changes in the level of inflation offer valuable insights into the state of the nation’s economy, this data often lags behind actual events. Unemployment tends to peak after the economy does, and changes in the unemployment report are showing how businesses responded to the economy rather than providing information about what the future trend will be. Inflation also tends to show how consumers and producers have responded to economic events rather than forecasting trends.
Local Conditions Might Deviate From National Trends
In addition to providing a look at the past, most data is collected at the national level and may not reflect the conditions experienced in any local area. In a smaller community, the addition or loss of a single large employer could have a significant impact on the economy. This impact could be in line with the national trends, or completely opposite to the trend of the broad economy.
Only limited data is available at the local level. A nontraditional economic indicator — real estate prices — could hold valuable information. When employers are hiring, it is logical to expect real estate prices to be rising. As employment falls, real estate prices usually also fall. Tracking local real estate data through web sites like Zillow or Truila could provide unique insights into the local economy that could help business owners make important decisions.