Kirchenbauer also says investors should pay attention to numbers related to the construction industry, and that manufacturing new orders can show whether consumer demand is growing or shrinking. "Consumer expectations may be worth watching, but can also be overly optimistic or pessimistic depending on what is going on economically and politically," she says.
Dawal says the most important indicators are tied to what he calls the three legs of the spending stool: the individual, business, and government spending rates.
According to Dawal, the individual rate shows how consumers feel about their personal finances: The more optimistic they are, the more they'll spend. An increase in the government spending rate can boost the economy, while a decrease will serve as a drag. As for business spending, Dawal says, "If businesses are finding a reason to spend, that bodes well for future economic activity."
But Kirchenbauer cautions that even a long-term trend in positive economic indicators might not be enough to change the mood of the market. "Right now, the market is more often moving up or down on short-term concerns, worries, and unsubstantiated optimism or hopes," she says. "For most consumers, they need to … stay long-term and strategically focused on their goals and portfolio that will get them there with the least volatility."