Macro Indicators and FRED: Reading the Economy's Vital Signs
No company trades in a vacuum. The broad economy — growth, inflation, rates, employment — sets the backdrop that can lift or sink whole markets regardless of any single company's results. These are the macro indicators, and most are freely available on FRED.
Macro as a gate, not a score
EquiReason measurement ·
Macro data is easy to over-weight. In this system it is not blended into a company's score at all; it sits in front of the decision as a gate, and in a supportive regime it barely binds:
- 99.6%
- of audited rows passed the macro gate
- 0.4%
- were held back as caution
- 2
- independent inputs behind the regime call
A pass rate this high is the intended behaviour, not a broken filter. The gate exists to cap conviction when the regime turns hostile, which means in a benign regime it should be nearly invisible and in a deteriorating one it should bind hard. Judging a macro overlay by how often it fires in a calm market is how overlays get tuned into permanent pessimism. The regime call itself combines a macroeconomic snapshot with current market signals rather than resting on either alone.
Derived from SEC filings via EquiReason's own processing pipeline. How this is measured.
What FRED is
FRED (Federal Reserve Economic Data) is a free public database maintained by the Federal Reserve Bank of St. Louis. It hosts hundreds of thousands of economic time series — from GDP to inflation to interest rates — making it the standard reference point for tracking the macro backdrop.
The indicators that matter most
- GDP — the broadest measure of economic output and growth
- CPI (Consumer Price Index) — the headline gauge of inflation
- Unemployment rate — the core read on the labour market
- Federal funds rate — the Fed's policy rate, which ripples through borrowing costs everywhere
- The yield curve — the gap between long- and short-term Treasury yields, watched as a recession signal
Leading, coincident and lagging
Not all indicators tell you the same thing about timing. Leading indicators (like the yield curve or new orders) tend to move before the economy does. Coincident indicators (like GDP) move with it. Lagging indicators (like unemployment, which often keeps rising after a recession starts) confirm what already happened. Knowing which is which prevents reading old news as a forecast.
Why it matters for individual stocks
Macro conditions act as a gate. A strong company thesis can still struggle in a hostile macro environment, and a weak one can be carried by a favourable tide. Checking a company's story against the macro backdrop — does the environment support or fight the thesis? — is a basic discipline of good analysis.
Frequently asked questions
What is FRED used for?
FRED is a free database from the St. Louis Fed that hosts hundreds of thousands of economic data series — GDP, inflation, unemployment, interest rates and more — used to track and analyse the macroeconomic backdrop.
What's the difference between leading and lagging indicators?
Leading indicators tend to move before the economy (e.g. the yield curve); lagging indicators move after it and confirm what already happened (e.g. unemployment). Coincident indicators like GDP move with the economy.