A helpful guide to economic and investing terms

Key Terms to Know

What is gross domestic product (GDP)?

GDP is a monetary measure of the market value of all the final goods and services produced in a specific time frame. GDP is often used as a metric for international comparisons as well as a broad measure of economic progress and has been described as the “world’s most powerful statistical indicator of national development and progress.”

What is consumer confidence?

Consumer confidence is an economic indicator based on the level of consumer spending. With this indicator, increased consumer confidence signifies economic growth through increased consumer spending or consumption. On the other hand, decreasing consumer confidence signifies slowing economic growth and a reduction in spending.

Essentially, the more confident people feel about the economy, their jobs and incomes, the more likely they are to spend money. Declining consumer confidence is a sign of slowing economic growth and may indicate that the economy is facing headwinds.

What is 10-year Treasury note?

A 10-year Treasury note (T-note) is a debt obligation issued by the government with a maturity of 10 years upon initial issuance. A 10-year T-note pays interest at a fixed rate once every six months and pays the face value to the holder at maturity. They serve as a benchmark for other borrowing rates like mortgage rates, and when they fluctuate it can have significant implications across the financial and economic landscape. Interestingly, the U.S. government partially funds itself by issuing 10-year Treasury notes.

What is the labor market?

The labor market is defined as the supply and demand for labor—employees provide the supply, while employers provide the demand. Important aspects of the labor market include labor supply and demand, earnings, unemployment rate, labor force participation rate, employment-to-population ratio and more.

What is inflation?

Inflation has been a hot topic the past year. Using the Consumer Price Index (CPI), it measures how much more expensive goods and services has become over time and corresponds to a reduction in the purchasing power of money. So, inflation reduces the value of currency over time. With inflation, you can buy less today with $1 than you could yesterday.

What is fixed income?

Fixed income refers to any type of investment in which the borrower or issuer must make payments of a fixed amount on a fixed schedule until its maturity date. At maturity, investors are repaid the principal amount they had invested. Typical investments include government and corporate bonds, CDs and money market funds that offer a steady stream of income with less risk than traditional stock options.

What is the S&P 500?

The S&P 500 is a stock market index that tracks the financial performance of the top 500 publicly traded companies listed on stock exchanges in the U.S. It is widely considered one of the best gauges of large U.S. stocks, with an emphasis on market capitalization. Other examples of exchanges include New York Stock Exchange (NYSE) and the Nasdaq.

What are inventories?

Inventory is any item of property held in stock by a company that can include finished goods, work in progress goods and raw materials. Inventory is whatever products a company has that will earn it a profit and are classified as an asset on a businesses’ balance sheet.

Stay tuned for next quarter’s economic update.

UMB Investment Management is a division within UMB Bank, n.a. that manages active portfolios for employee benefit plans, endowments and foundations, fiduciary accounts and individuals. UMB Financial Services, Inc.* is a wholly owned subsidiary of UMB Financial Corporation and an affiliate of UMB Bank, n.a. UMB Bank, n.a., is a subsidiary of UMB Financial Corporation.

This report is provided for informational purposes only and contains no investment advice or recommendations to buy or sell any specific securities. Statements in this report are based on the opinions of UMB Investment Management and the information available at the time this report was published.

All opinions represent UMB Investment Management’s judgments as of the date of this report and are subject to change at any time without notice. You should not use this report as a substitute for your own judgment, and you should consult professional advisors before making any tax, legal, financial planning or investment decisions. This report contains no investment recommendations and you should not interpret the statements in this report as investment, tax, legal, or financial planning advice. UMB Investment Management obtained information used in this report from third-party sources it believes to be reliable, but this information is not necessarily comprehensive and UMB Investment Management does not guarantee that it is accurate.

All investments involve risk, including the possible loss of principal. Past performance is no guarantee of future results. Neither UMB Investment Management nor its affiliates, directors, officers, employees or agents accepts any liability for any loss or damage arising out of your use of all or any part of this report.

“UMB” – Reg. U.S. Pat. & Tm. Off. Copyright © 2021. UMB Financial Corporation. All Rights Reserved.

* Securities offered through UMB Financial Services, Inc. Member FINRA, SIPC or the UMB Bank, n.a. Capital Markets Division

Insurance products offered through UMB Insurance Inc.

You may not have an account with all of these entities. Contact your UMB representative if you have any questions.

Interested in learning more about our Private Wealth Management division? See what we mean when we say, “Your story. Our focus.”