The WSJ Guide to the 50 Economic Indicators That Really Matter by Simon Constable Summary

The WSJ Guide to the 50 Economic Indicators That Really Matter identifies unconventional yet critical economic metrics—like the Big Mac Index and Zombie Bank Ratio—that help investors predict market shifts. It combines practical investment strategies with analysis of economic cycles, emphasizing long-term risk management over speculation. The book translates complex data into actionable insights for financial decision-making.

This book is essential for investors, financial analysts, and economics enthusiasts seeking to leverage overlooked indicators like the Crack Spread or Texas Ratio. It’s also valuable for business professionals aiming to understand macroeconomic trends or mitigate risks in volatile markets.

Yes—the book has sold over 80,000 copies globally, won industry awards, and is translated into multiple languages. It’s praised for turning niche metrics like the TIPS Spread into practical tools for anticipating inflation or recession risks, making it a unique resource for data-driven investors.

The Zombie Bank Ratio (or Texas Ratio) assesses bank stability by comparing bad loans to available capital. A ratio above 100% signals potential collapse, alerting investors to systemic risks in the financial sector. The book links this metric to broader credit market health and economic recovery challenges.

The Crack Spread measures refinery profitability by tracking the price difference between crude oil and its refined products (e.g., gasoline). Widening spreads signal rising energy demand or supply constraints, offering insights into energy sector investments and broader economic activity.

Beyond standard metrics like CPI, the book emphasizes the GDP Deflator (broad inflation across all goods) and the TIPS Spread (market expectations of future inflation). These help investors hedge against inflationary risks in portfolios.

The underemployment rate—released monthly—is a consumption indicator. When it rises, the book recommends investing in defensive sectors like pharmaceuticals or consumer staples, as economic uncertainty boosts demand for essential goods.

This real-time index, developed by the Philadelphia Fed, aggregates data on employment, production, and manufacturing to gauge U.S. economic health. The book highlights its timeliness over traditional quarterly metrics, helping investors react faster to macroeconomic shifts.

Co-author Simon Constable holds an economics degree and MBA, with Wall Street experience advising Fortune 500 companies. His background in financial journalism and market analysis ensures the indicators are both theoretically sound and practically tested.

The guide advocates for diversification across indicators—like combining consumption data with energy market metrics—to avoid overreliance on single metrics. It stresses proactive risk management and long-term strategy over reactionary trading.

The Big Mac Index, a lighthearted metric, compares global burger prices to assess currency valuation disparities. The book uses it to illustrate purchasing power parity theory and identify potential currency market imbalances.

Zombie banks—barely solvent institutions—constrain credit flow and slow economic recovery. By monitoring their prevalence via the Texas Ratio, investors can anticipate sector instability and adjust exposure to financial stocks.