Data Decoder: Deciphering Messages in Key Reports

Back when cereal boxes contained prizes, one popular item was a "secret decoder ring" that let kids send and decipher hidden messages. These days, cereal boxes just contain cereal, but grown-up investors might hanker for "magic" rings to help them read important messages hidden within popular market data.

Investors are inundated with numbers, and flashy headlines draw most of the attention. Macro readings like jobs growth, gross domestic product, and retail sales often move markets. Understanding these is just part of the job, however. Most reports also contain nuggets of information—buried beneath the headlines—that can shed more light once deciphered.

Consider the monthly U.S. durable goods orders report. In March 2025, orders for all durable goods across the economy—including aircraft and military equipment—rose an astonishing 9.2% from February. On its face, that looked like great news, countering talk of a slowing economy.

But just looking at the report's headline wouldn't have told the entire story. Savvy investors invested further to focus on just a sliver of the report that excludes defense goods and aircraft orders. This number, sometimes called "core capital goods," is considered a helpful proxy for business spending plans. The core reading rose just 0.1% that month, coming in below analysts' expectations and hinting that all was not well in the business world.

Failure to note such distinctions could hurt an investor's ability to understand and anticipate how the market will respond to data. But investors who know what to look for tend to get more nutrition from each daily helping of data, even without a magic ring.

"The devil is often in the details, so it's up to the individual investor to perform the necessary due diligence to dig beneath the headline figures to understand what economic trends may be developing," said Nathan Peterson, director of derivatives analysis at the Schwab Center for Financial Research.

Here are a few other crunchy nuggets to consider getting to know, though you won't find them in your favorite cereal.

Control group retail sales: The monthly U.S. retail sales report from the U.S. Census Bureau tracks sales of everything from motor vehicles to clothing to food purchases, and everything in between. However, only part of the report's data gets used to calculate gross domestic product (GDP), and that's the part called "Control group retail sales."

This reading excludes sales from auto dealers, building materials stores, and gas stations. Knowing the gap between headline retail sales and this number can give investors a better sense of how the government sees economic growth trending. It often differs substantially from the headline, partly because it omits volatile metrics like gas prices. In March 2025, retail sales climbed 1.4% month over month, but control group retail sales rose just 0.4%. Savvy investors saw that as evidence that spending growth was moderate and not as strong as the headline suggested. 

GDP deflator: Gross domestic product from the Bureau of Economic Analysis is essentially the sum of all the finished goods and services in a country's economy over a certain time frame. The headline GDP number is among the most important quarterly readings for investors, but don't ignore the GDP Price Deflator. 

This data, which measures changes in prices for goods and services produced in the United States, is sometimes considered a better inflation indicator than the monthly Consumer Price Index (CPI). That's in part because the GDP deflator captures changes in prices related to production and income developments, making it more flexible and responsive to small price movements. In the first quarter of 2025, the government's first estimate for the GDP Price Deflator was a lofty 3.7%, up from 2.3% the previous quarter. That, combined with a 0.3% drop in annualized GDP, triggered "stagflation" talk on Wall Street. Stagflation is an undesirable economic climate defined by inflation and slow growth.

Household Survey: The government's monthly nonfarm payrolls report from the Bureau of Labor Statistics (BLS) is arguably the most closely followed data on Wall Street, and investors naturally gravitate to the headline, or Establishment Survey, number showing monthly job creation reported by businesses. That number is taken from a survey of around 121,000 businesses and government agencies. A separate household survey measures the labor force among 60,000 households, providing color beyond the headlines. And this Household Survey is what generates the unemployment rate. 

"I always tell people, 'Go beyond just the release of the headline when you get the monthly jobs report,'" said Liz Ann Sonders, chief investment strategist at Schwab. "The Household Survey tends, not always, but tends to be a little bit more accurate at inflection points." An inflection point can mean when the economy is poised to shift into weaker or stronger growth, and the Household Survey can sometimes signal these inflections more quickly than the Establishment Survey. For months in 2024, employment growth as measured by the household survey lagged the nonfarm payrolls report. This dichotomy indicated that jobs data was not as strong as the headlines suggested. 

PCE product prices: The monthly Personal Consumption Expenditures (PCE) price index is the Federal Reserve's favorite inflation metric, partly because it measures adjustments in spending by consumers as they respond to changing prices. The better-known CPI doesn't adjust for changing consumer habits. The headline and core PCE (which excludes food and energy) soak up most of Wall Street's attention when each PCE report comes out, but investors who want to know more about what's under the surface might consider emulating Atlanta Fed President Raphael Bostic.

Unlike most investors, Bostic drills into the report's tables that measure individual price movements among the roughly 200 tracked products. Typically, when inflation is near the Fed's target rate of 2%, only 20% (one-fifth) of the items in the PCE basket see price increases of 5% or more, he told CNBC in 2024. In early 2024, nearly one-third of the basket saw such increases, suggesting to Bostic that inflation wasn't coming down fast enough.

Trimmed-mean PCE: Another item tracked by Bostic that falls under most investors' radar is the Dallas Federal Reserve's Trimmed Mean PCE inflation rate, an alternative measure of core inflation in the PCE price index calculated by the Dallas Fed staff.

Bostic called this one of the better indicators of near-term inflation, and it's a simple calculation that strips out the highest and lowest price changes in PCE to get a weighted average. In March 2025, the 12-month Trimmed Mean PCE rose 2.5%, a little above the 2.3% PCE growth rate and perhaps a sign that inflation hadn't retreated as much as headlines suggested. Bostic saw progress in this data in early 2024, and later that year, he and other Fed policymakers cut rates by 100 basis points over three meetings. While this indicator was far from the only one consulted, it likely played a role in their decision-making. Investors who track it might also get a better sense of Fed leaders' rationale.

Beyond these touchpoints, it also helps for investors to have a sense of which data they should focus on amid all the numbers. Not every data point is extremely important. Knowing where to focus is another helpful tip for investors so they can avoid feeling overwhelmed.

"Some economic reports carry more weight than others when it comes to being a market-moving catalyst," Schwab's Peterson said. "Because consumer spending represents two-thirds of U.S. GDP—and economic expansion translates into corporate profits—markets tend to be more reactive to reports that provide reads into the health of the consumer. Examples include the monthly jobs or retail sales reports."

"And because the Fed essentially controls the spigot of capital flow throughout the U.S. economy—and price stability is one of their primary mandates—inflation data is very important to the markets, especially if the Fed is engaged in a hiking or easing cycle."

Approaching the next key data with these lessons in mind won't be as fun as finding a magic ring in your breakfast cereal, but it might fortify anyone trying to decipher the market's messages. And having another tool in your research arsenal is better than any free plastic toy.