How your company is performing is not obvious unless you compare it to something. What looks like good work could simply be a rising economy lifting even the leaky boats. Or in difficult times, you may be outperforming your competition. Looking at economic data can help you understand your own company's performance. This article explains how to do that with the Fred database, a free source of massive economic data.
Let's begin, though, with a story. People think of an economist as being a forecaster, which we often are, but some of my most useful work was looking at past data. One day the internal reports showed lackluster deposit growth at the bank where I worked. One executive wanted to pay higher interest on deposits. Another wanted to spend more money on marketing. I showed data that all banks, including our competitors, were having weak deposit growth. We were not losing market share at all, because it was an economy-wide phenomenon. We decided to save money by not changing anything, which more than covered the cost of my annual salary.
To look at economic data, go to Fred or if you lose that link, just do a Google (GOOG) search for Fred Data. (Fred stands for Federal Reserve Economic Data. It's a project of the St. Louis Fed.)
Use the search box in the upper right hand corner. Let's say that we are interested in oil prices. Type that into the box. The first result (at the time that I wrote this article) has a long name, but its friends call it West Texas Crude. Click on the link for “Daily” and up comes a graph.
Graphs can be changed in many ways. I often change the time period charted.
Now let's make it interesting by adding another concept. Let's compare oil prices to natural gas prices. Scroll down underneath the graph to the horizontal bar labeled “Add Data Series.” Click that and type Natural Gas Price. Notice that the first result has a “Discontinued” label on it. Scroll down to the first entry with daily data, which is the Henry Hub Natural Gas Spot Price. Now click the blue button “Add Series.”
