FMC Barometers

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Explaining FMC Barometers

FMC Barometers are numerical indicators that provide insights into the economy overlooked by traditional analyses. They include:


At times of uncertainty, people tend to safeguard their money by buying commodities and hard assets with intrinsic value. For that reason, the prices of commodities, especially gold, have long been seen as leading indicators of market emotions about the direction of the economy and especially monetary stability. The weakening of the dollar, and the beginnings of inflation, for example, are usually first reflected by rising gold and commodities prices.

Gold. Gold prices are the best barometer of what’s happening to your money. To see this, one need only look at historical trends as shown in charts available on

The price of gold shot up during the historic inflation of the 1970s. It remained relatively steady during the 1980s and 1990s when the dollar was generally stable. It began to climb during the first decade of the 2000s, coinciding with the weakening of the dollar. From 2000 until the summer of 2011, gold went up sixfold, eventually reaching a high of $1900. per ounce at the height of the Fed’s unprecedented quantitative easing. Since then it has declined with the strengthening of the dollar but has yet to return to pre-2000 levels, reflecting continuing uncertainty about the global economy and the dollar.

Commodities. FMC Barometers features the Thomson Reuters/ Jeffries CRB Index, a commodities futures price index which tracks 19 commodities: Aluminum, Cocoa, Coffee, Copper, Corn, Cotton, Crude Oil, Gold, Heating Oil, Lean Hogs, Live Cattle, Natural Gas, Nickel, Orange Juice, Silver, Soybeans, Sugar, Unleaded Gas and Wheat. Like gold, commodity prices can fluctuate in response to monetary instability. But they are also sensitive to other economic conditions like weather and market demand.


Gross Output (GO) is a broader measure of U.S. economic activity based on the sales or receipts of all industries throughout the production process, including business-to-business transactions. Quarterly Gross Output figures have been published since 2012 by the Bureau of Economic Analysis, which also publishes Gross Domestic Product (GDP).

Gross Output was first introduced as a macroeconomic tool by economist Mark Skousen in 1990 in his textbook The Structure of Production. He explains that while GO and GDP are “complementary” measures, “GDP leaves out a big part of the economy, business-to-business transactions.”

In contrast, “GO includes most B-to-B activity that is vital to the production process.” GO’s value as an indicator, he says, is that it “does a better job of measuring total economic activity and demonstrates that business spending is more significant than consumer spending. By using GO data, we see that consumer spending is actually less than 40% of economic activity, not the 70% figure that is reported by the media.”

Skousen also notes that during downturns GO tends to fall faster than GDP, while during expansions GO rises faster than GDP.

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