By Jersey Gilbert

(MONEY Magazine) – Ever since the Oct. 19 crash put Americans on recession alert, announcements of economic indicators such as those at left and on page 169 have been front- page news. With good reason: correctly interpreted, key indicators can provide early warnings of boom or bust in the economy. And since economic prospects determine the outlook for investments, some recent indicator reports have triggered turmoil in securities markets. For example, the release in mid- April of discouraging February trade-gap figures sent the Dow Jones industrial average down 101 points in a single day. Indicators are statistics that are regularly collected by government agencies and private institutions to measure various types of economic activity; more than 50 are widely followed. Not all indicators are important to investors trying to anticipate market trends. Some, such as the unemployment rate, are of interest largely because of their social and political implications. Depending on the kind of investor you are, certain indicators may be more helpful than others. Stock investors need indicators that signal turns in the economy. Bond investors should focus on inflation indicators, because bonds do best in periods of declining or stable prices. Whatever the indicator, don't attach too much significance to individual monthly numbers. You have to examine the data over a period of three to six months, says Robert J. Eggert Sr., editor of Blue Chip Economic Indicators, a forecasting newsletter (P.O. Box 2243, Sedona, Ariz. 86336; monthly, $377 a year). Look for changing patterns -- for example, cases in which a series of mostly rising numbers is replaced by a falling trend. Likewise, a signal from one indicator should not be given much weight without corroboration from others. Any single area of the economy may behave idiosyncratically from time to time: for example, auto sales, often cited as an economic benchmark, can be boosted temporarily by manufacturers' rebates. Lastly, remember that in most cases the number announced initially is subject to revision. One of the best-known forecasting tools, the index of leading economic indicators, at first showed declines for last October, November and December, throwing a recession scare into economy watchers. But in February a revised December figure was released, and it was positive, signifying that no slump was on the way. The six indicators that are described on these pages are ones that economists think are important to investors. You will find them in the Wall Street Journal and in the business sections of most major newspapers. Taken together in late April, the six signaled continuing sluggishness for the economy.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: A weighted average of 11 components, the index of leading economic indicators includes measures of changes in the number of new building permits, the size of business inventories, stock prices and the amount of money in circulation. It is compiled by the Commerce Department's Bureau of Economic Analysis and announced during the last week of every month. While it has an excellent record of anticipating slowdowns, this indicator sometimes falsely predicts recessions. When it is right, the index begins a steady decline nine months before a recession. It has recently failed to establish a trend. DESCRIPTION: Changes in the index of leading economic indicators from September 1987 to February 1988.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: These two indicators, announced by the Bureau of Labor Statistics on the first Friday of every month, should be considered together. They give early clues to shifts in consumer buying power, which is critically important to economic growth because consumer spending accounts for two-thirds of the gross national product. Recent nonfarm employment data have shown that more people are employed, but average weekly per capita earnings have been flat. The resulting small increase in total income is likely to produce only limited economic expansion. DESCRIPTION: Changes in the nonfarm employment data and weekly per capita earnings are compared.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: Consumers may choose to save the little extra income they are receiving, of course, and that would mean lower revenues for corporations. To confirm that additional income is leading to increased consumption, check the monthly retail sales figures projected by the Census Bureau from its survey of more than 50,000 stores. Spotting the steady drift downward in this indicator last year helped many investors avoid the October crash. Lately the indicator has been inching back up, signifying a slow-growth economy.

DESCRIPTION: Amount of retail sales from October 1987 to March 1988 in billions of dollars.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: Compiled by the Census Bureau, merchandise exports are announced on the second Thursday or Friday of the month, along with import statistics and the bottom line -- the trade gap. The export figures in particular have become a hotly followed indicator in the past year. With a three-year 37% decline in the value of the dollar, U.S. goods are once again competitive overseas. As a result, the economy now has a way to expand even if U.S. consumer demand lags. Recently, however, levels of exports have been lower than investors and economists had hoped, suggesting little expansion ahead. DESCRIPTION: Changes in merchandise exports from September 1987 to February 1988, in billions of dollars.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: Keep your eye on the producer price index of finished goods for a warning that higher prices are working their way through the economy. This index, announced on the second Friday of every month, is derived from a Bureau of Labor Statistics mail survey of 22,000 manufacturers of more than 3,000 products. Because the index records the prices of goods as they leave the factory rather than when they are sold in the retail market, it is able to detect changes earlier than the consumer price index. A jump in the March PPI, announced in April, confirmed an upward trend in inflation and depressed bond prices. DESCRIPTION: Change in the producer price index from October 1987 to March 1988.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: Commodity prices are an economic indicator you can monitor daily. Because commodities are the raw materials from which goods are produced, increases in their prices can signal a general price rise. Many bond investors pay attention to such highly visible commodities as gold and oil, though both are subject to volatile price swings from unique market conditions. Lawrence A. Kudlow, chief economist at Bear Stearns, says the much broader CRB commodity futures index, compiled from prices on the major commodity exchanges by the CRB (Con sumer Research Bureau) in New York City, has a better record of anticipating changes in the producer price index. The CRB index has been predicting an upswing in prices. DESCRIPTION: Changes in the CRB commodity futures index from October 1987 to March 1988.