The economy affects everything in life more than you might imagine, and it’s not always easy to tell where it is headed. There are economic indicators that can predict where the economy may be headed, though they aren’t always based on solid data. The lipstick index, for example, is based on decades of historic economic information that has shown that when the economy is taking a downturn people tend to spend more frugally, indulging in little splurges like lipstick. Looking to these economic indicators can give you an idea of what you need to do with your investments or with your business, but which indices can you trust? Legal indices have been a strong predictor of economic movements for years. For example, when more people are contacting lawyers to handle foreclosures on their homes that can indicate a downturn even when other economic indicators show that foreclosures should be down.
Keeping up with these economic indicators can help you to make short term decisions about your long term investments and business plans. If you see the bankruptcy rate rising, for instance, now might not be the best time to grow a business that is based on consumer spending.
Current legal indices predictions include:
- Rising consumer confidence will occur over the following months thanks to a reduction in consumer financial stress
- Thanks to rising credit scores the housing market should pick up steam
- Bankruptcies are in decline and should stay that way depending on the record highs in auto loan, student loan, and household debt
- Most foreclosures right now are happening because of loans that have been delinquent for a long time, so foreclosures are not likely to go up
- Thanks to limited supply and high demand, home sales should continue to improve
These analyses are based on 15 years of legal and economic data. As with some economic indicators, they may be in conflict with other predictions - you will ultimately have to decide which economic indicators you would like to base your short term financial decisions on in order to grow your business or portfolio in the long term. There are lots of angles by which you can judge the health of the U.S. economy as well as the health of individual household finances, and while some may be indicating the same thing others may be completely contradictory.
Learn more about legal Indices from this infographic and make more informed short term decisions about the long term health of your business or portfolio.