NEW YORK (MainStreet) – In uncertain financial times (or always, as seems to be the case in the volatile and interconnected new world economy), all manner of hucksters come out of the woodwork with ideas on how to get people back on stable footing, for a small fee of course. They may come in the form of mortgage consultants, stock pickers, or celebrities hawking the best prepaid credit card ever, but they will come.

The reason so many people are able to make a living reading economic conditions and leveraging that knowledge to the benefit of the paying customer’s wallet centers on one fundamental truth: it’s hard to predict the future.

For the most successful analysts, economic forecasting relies on numbers. But numbers lie, so environmental and demographic trends must be factored in as well. But people behave based on what information makes its way to their eyes and ears, so tracking the media and monitoring social networks has a place at the table as well.

The moral of the story? There is no such thing as perfect information, and there is no such thing as the right formula. A model that worked for the past 10 years probably may not work for the next 10, so what’s most important is taking a wide-field view of economic trends and using a mixture of indicators to make the best decisions possible. And, of course, monitoring the outcome of those decisions.

Dennis Stearns, the president of Stearns Financial Services Group and the recipient of numerous awards for his skill with forecasting and financial planning, recommends a model that focuses on the “trillion-dollar super-trends” that shape the fundamentals of the world economy, mixed with official government data and some “messy” indicators that focus on consumer behavior. He likens the process to a lesson he learned from a submarine commander friend.

“He had considerable sonar resources to see the terrain around him and ahead of him,” Stearns says, “which for us is equivalent to leading economic indicators and jobs reports. But sometimes it’s the nuance in the background noise that informed him if an enemy sub was nearby. Some of the more offbeat and non-traditional indicators speak to that nuance, and all the good forecasters I’ve known have taken all that and used it to get a better view of what’s around their submarine.”

Here, then, are some of the key indicators that for Stearns and other experts are the most helpful in giving you a feel for where the economy is going.

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1. The Conference Board’s Leading Economic Indicator

The Conference Board, a leading research firm that tracks a number of proprietary economic indicators, puts together its “Leading Economic Index”, made up of 10 different components, that has stood the test of time.

By considering three manufacturing statistics, unemployment numbers, stats on housing and the money supply, with a bit of stock movements thrown in, the measure has correctly anticipated every recession in the past 60 years, with only two false positives. Since 1959, the index has gone negative 10 times, and eight of those inflection points were shortly followed by periods of recession.

This impressive record has made the indicator a central component of Stearns’ forecasting models, even more so because the components of the Leading Economic Index evolve over time. Stearns reports that the indicator is currently being updated to reflect fundamental changes.

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2. The Consumer Confidence Index

Perhaps one of the most commonly-cited economic indicators of all, the Conference Board’s Consumer Confidence Index is meant to predict buying behavior.

Most often this index is used to track movements in the stock market (see a comparison of the index and the performance of the S&P 500 from 2005-2010 here), and Stearns’ most recent analysis (see graphic above) shows a significant relationship between consumer confidence and the Dow Jones Industrial Average, often used as a barometer of the overall economy.

When the consumer confidence index is low (with a value less than 66), the Dow shows significant gains. When confidence is high, the Dow tends to show a small net loss. The December value of the index, at 64.5, suggests that now is a good time to invest.

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3. The Shoeshine Index

There are a number of what can be considered urban legends about economic forecasting (most often concerning women’s beauty and fashion trends such as the height of high heels, the length of skirts or the sale of lipstick), but unlike more formal measures, they rarely stand the test of time. That’s not to say that those “messy” conclusions can’t be shoehorned into more formal models, as Stearns’ firm has done with its “Shoeshine Index.”

“Many years ago we developed and formalized relationships with shoeshine guys at major U.S. airports,” Stearns says. “People share a lot about what is going on with their businesses, how they feel about the economy, and our contacts send us Tweets or emails every week with details on what they are hearing. It’s a messy combination of a lot of behavioral finance issues but it has tended to correlate pretty well with the consumer sentiment index before it comes out.”

He admits that it’s the least scientific of the indicators his firm uses, but he isn’t the only one to see value in such measures. Phil Cioppa, the managing principal and chief investment officer of Connecticut-based Arbol Financial Strategies, uses such “soft indicators” as well.

“A lot of us are using these soft indicators to show general trends,” Cioppa says, “because they’re more people-oriented, they’re more down-to-earth. Of course you can’t look at them only, though, since we are still in the adolescent phase and these trends still have a way to go before they are specific enough.”

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4. Federal Reserve Beige Book

One of the great functions of government is to serve as a central repository of data. With its network of monitoring and regulatory agencies, and its role in setting monetary policy for the country, the government provides the most comprehensive numbers about the nation’s economic activities. That’s not to say that all government data is sound – as with any numbers they exist on a spectrum of precision and timeliness – but a few stand out for their role in forecasting.

Stearns likes information from the Federal Reserve Bank, a network of 12 regional financial institutions, for its ability to track regional trends within seven key areas in its Beige Book, which reports the anecdotal summary of regional economic conditions from each of the 12 member banks.

“The beige book gets you plugged into how the private and mainstream economy is doing,” says Stearns. “Not the Fortune 500 but the rest of everybody else. A lot of those are very closely-watched.”

The most recent report, released Wednesday, shows an overall positive outlook in five of the seven key areas (see graphic above), which helps forecasters get a sector-by-sector view of the economy, which they can then break down by region for a more detailed view of current conditions around the country.

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5. Consumer Credit Outstanding

Another statistic compiled by the Fed, the total amount of Consumer Credit Outstanding is commonly used to predict trends in the consumer economy. Cioppa considers it mainly because buying on credit has become a staple of American financial behavior, a trend that shows no sign of stopping.

“The consumer credit indicator is a great one to use because it shows what people are putting on their credit cards,” Cioppa says. “It’s a pretty steady indicator to look at, since people buy on credit more when things are good than when things are bad.”

Indeed, a comparison of 10 years’ worth of outstanding consumer credit and GDP figures in the graphic above shows that the drop in outstanding credit in 2007 was soon followed by a drop in GDP in 2008, which we came to call the Great Recession.

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6. What’s in Your Wallet?

Closely related to the official numbers that point to Americans’ behavior with credit, Cioppa likes to consider the very simple indicator of how much cash is in your wallet, right now, to get a sense of how the state of the economy, right now.

“I’m a big believer in the idea that people should look at what is happening around them every day in their own community to get an idea of where the economy is going,” Cioppa says. “Our economy is local. What is the price at the gas pump in your neighborhood? How much money is in your wallet right now? If it used to be that you kept $50 in there but now it’s more like $10, that says a lot.”

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7. Unemployment

Of course, it makes sense intuitively that the amount of money in somebody’s wallet and the amount of money they spend on their credit cards has a lot to do with their job situation. That’s why prognosticators like Stearns and Cioppa will at least look at official unemployment numbers when putting together their forecasts.

“I think the major indicator is the unemployment rate,” Cioppa says. “Even though it’s a false number because it doesn’t include agriculture or seasonal employment, or single proprietors, or people who may be ‘underemployed’, you start there to get an idea of where buying power is.”

A comparison of the unemployment rate and the country’s GDP during the past 10 years (see graphic above) shows that rising unemployment in 2007 signaled the leveling off, and eventually the negative turn, of U.S. GDP. Before that, falling unemployment from 2003 to 2007 coincided with accelerating GDP growth during that period.

It must be said though, that no matter how much any single indicator reflects broader changes in the economy, any good forecaster will use a combination of many metrics to get a picture of how to protect your money.

“You have to take the hard and the soft together,” Cioppa says. “Anyone who isn’t using both of them isn’t using the right analysis and I think they’re really missing the boat.”

Stearns agrees, even if his view takes place on a submarine rather than aboat.

Greg Emerson is an editor/writer for MainStreet. You can reach him by email at greg.emerson [at] thestreet.com, or follow him on Twitter at @emersongreg.

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