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There are some dirty little secrets about the economics profession that many business people are blissfully unaware of. Under most circumstances this is a good thing, but not when the business owner or CEO sets about trying to make sense of all the opinions and all the analysis these commentators provide. Today the average business owner is bombarded with a constant stream of assessments, forecasts and economic minutia that serve little function other than to confuse.

What in all of this really matters? What should the executive/owner be paying attention to when trying to figure out where his or her business is heading?

The first step in deciphering all of this is to understand that economics is essentially a philosophy wrapped in statistical analysis. The numbers that are collected may all be the same (although even that can be questioned), but the analysis will be through a filter of what that economist believes. A free market economist will look at the rising rates of foreclosure and conclude that this will bring home prices down to more reasonable levels, yet a Keynesian will want to interrupt the process to some degree and protect the greater economy from the damage caused by all these people losing their homes.

This doesn't mean that a business person needs to take sides in these arcane philosophical debates, but it is useful to know where the given economist is coming from in terms of his or her analysis. In the interest of full disclosure, this author is drawn to the Chicago school of Milton Friedman and the Austrian school of Ludwig Von Mises. In other words - I am a believer in free markets and very limited government engagement in the economy.

The second step is knowing where to focus most of your economic attention. Every industry has some unique indicators that allow a person to understand what is happening in that sector, but when it comes to the larger economy there are several that stand out as the most useful in determining direction. Five important indicators tell the most important parts of the story for the majority of businesses.

NUMBER ONE: ACTIONS OF THE FEDERAL RESERVE

If you're going to follow the actions of the Fed, then you need to follow all of them - not just its decisions about what the interest rate should be. This includes items like its determination of member bank's reserve ratios, its measurement of real money supply and the decisions it makes about bank access to capital.

The Federal Reserve is the central bank of the U.S., with the mandate to control the supply of money in the U.S. The traditional mission of the central bank is to control inflation and, in most cases, where the choice is whether to stimulate growth or fight inflation, it will opt to focus on the latter. The Fed does this by setting the rates that banks will use to borrow from the Fed, as it is the banker's bank. That rate then becomes the underpinning for all other interest rates - prime rates, mortgage rates, car loans and so on. It is a bit of a blunt instrument, as it doesn't force anybody to do anything. It just sets the stage.

The Fed has always had an easier time fighting inflation than pushing growth - it is easier to stop somebody from doing something by making it more expensive than it is to get somebody to do something - often referred to as pushing a string. The Fed has many other tools at its disposal to set the supply of money, but in the majority of cases all of these tools are pushing in the same direction. It's easier to see how serious the Fed is by watching how many tools it takes out of its tool box.

The casual observer needs to look at two or three items to monitor the Fed. The Beige Book is its assessment of the economy from one region to another and tells you what it thinks is happening out there. The second item is the minutes of its last meeting that describe what was discussed when the decisions on interest rates were made. The last set of things to look at are the comments that the Fed Chair makes to Congress, as this is his report to the country and the policy makers.

NUMBER TWO: TRENDS IN EMPLOYMENT

Second in consideration is employment trends - not just the jobless rate, but the distribution of jobs in terms of growth sectors, shrinking sectors and demographics. The unemployment rate tends to be a blunt instrument for measuring the economy, as it fails to provide information about who is getting work and where. The information needed is deeper than that as 95 percent of the eligible population is employed. What makes up the ineligible and where are they?

The collection of employment data is as much art as science and is infinitely more complex than it would appear. It isn't that easy to figure out where everybody works as reports from smaller, family-run companies are often delayed, part-time people are traditionally hard to count, and so are the seasonal workers. The complexity is endless, but the main point is that it is an inexact measurement. It is not usually very productive to obsess over fractions of a percent change in unemployment, but the analysts tend to do so anyway.

The more important aspect of employment is that which applies to your business and your customer's business. It is generally pretty easy to see what is happening in your own industry and many companies report job shortages in the middle of periods of high unemployment. It doesn't matter that an unskilled worker is looking for a job when your need is for a worker with specific skills that are in short supply. The real issue of unemployment is sectoral, and regional and national numbers are only the loosest of guides. Not unlike reporting at the end of a football weekend that the winners scored 376 points and the losers scored 278. Nice to know, but specifically which teams won and lost?

The more important employment factor yet is that which concerns your customer. If that industry is shedding jobs, it is not a good sign. If you are selling to the people who are losing those jobs, that is an even worse sign. The first indication that a company is struggling comes when layoffs start, as this is always the fastest and easiest way to reduce costs. When your top customer starts to issue pink slips, it's a good time to consider alternative sales channels.

The Labor Department collects the raw data and is a source of good national trends, but many of the private payroll management companies issue their own assessments and they are useful as well. The most effective way to watch your key customers is to note their local papers - they will always report a decline in employment.

NUMBER THREE: DURABLE GOODS ORDERS

The third indicator is manufacturing orders for durable goods, those goods that last longer than three years and are also referred to as capital goods. The purchases of these products are better indicators of where people and businesses think they will be in the future, as it often takes a long time to pay for them and, thus, they become investments in the future.