What are the most commonly overlooked macroeconomic indicators for Financial Services businesses?

1 Consumer Confidence

Consumer confidence is a measure of how optimistic or pessimistic consumers are about the current and future economic situation. It affects their spending and saving habits, which in turn influence the demand for financial products and services. For example, high consumer confidence can boost the demand for loans, mortgages, credit cards, and investments, while low consumer confidence can reduce the demand for these products and services. Consumer confidence is often measured by surveys, such as the Consumer Confidence Index (CCI) or the Consumer Sentiment Index (CSI).

2 Inflation Expectations

Inflation expectations are the beliefs of consumers, businesses, and investors about the future rate of inflation. They affect the decisions of these agents regarding their consumption, production, and investment activities. For example, high inflation expectations can reduce the real value of money and assets, which can encourage spending and borrowing, but also increase the cost of living and production. Low inflation expectations can increase the real value of money and assets, which can encourage saving and lending, but also decrease the incentive to invest and innovate. Inflation expectations are often derived from market indicators, such as bond yields, inflation swaps, or surveys.

3 Credit Conditions

Credit conditions are the availability and cost of credit in the economy. They affect the ability and willingness of consumers, businesses, and governments to borrow and lend money. For example, tight credit conditions can restrict the access to credit for borrowers, especially those with low credit ratings, which can hamper their spending and investment plans. Loose credit conditions can increase the access to credit for borrowers, especially those with high credit ratings, which can stimulate their spending and investment plans. Credit conditions are often influenced by monetary policy, regulatory frameworks, and market sentiments.

5 Labor Productivity

Labor productivity is the amount of output produced per unit of labor input. It reflects the efficiency and quality of a country's workforce and capital stock. It affects the growth potential, competitiveness, and living standards of a country. For example, high labor productivity can increase the output and income of a country, as well as enhance its competitiveness and living standards. Low labor productivity can decrease the output and income of a country, as well as reduce its competitiveness and living standards. Labor productivity is often calculated by dividing the gross domestic product (GDP) by the total hours worked.

6 Environmental Performance

Environmental performance is the degree to which a country's economy and society protect and improve the natural environment. It reflects the sustainability and responsibility of a country's development model. It affects the health, well-being, and resilience of a country. For example, high environmental performance can improve the quality of life and reduce the risks of environmental disasters and conflicts. Low environmental performance can deteriorate the quality of life and increase the risks of environmental disasters and conflicts. Environmental performance is often measured by indicators, such as the Environmental Performance Index (EPI) or the Ecological Footprint (EF).

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?