Understanding the many economic indicators that can impact your portfolio's performance is essential as an investor. Monitoring these indicators can help you better predict patterns, identify trends, and make informed investment decisions.

Here are some key economic indicators to watch this year.

Gross Domestic Product (GDP) — measures a country's total economic output over a specified period. It essentially represents an economy's size and growth rate, making it a fundamental indicator for investors to monitor. A growing GDP signifies a healthy economy, often leading to stronger corporate profits and higher stock prices.

Unemployment Rate—The unemployment rate is another critical indicator of an economy's health. High unemployment rates can spell trouble as they often correspond to lower consumer spending, which leads to lower corporate profits and, consequently, lower stock prices.

Inflation Rate— Inflation denotes the rate at which the overall level of prices for goods and services is rising. While moderate inflation is a sign of a growing economy, excessively high or rapidly increasing inflation can erode purchasing power and lead to economic instability. Watching this indicator helps investors adjust their strategies to shield themselves from inflation's effects.

Interest Rates— Central banks worldwide use interest rate adjustments to control inflation and stabilize the economy. Rising interest rates increase borrowing costs, potentially slowing economic activity and negatively impacting stock prices. Conversely, falling interest rates can stimulate economic growth and boost stock prices.

Consumer Confidence— The Consumer Confidence index measures consumers' optimism about their future financial position. High consumer confidence tends to stimulate economic growth as consumers spend more. This increased spending can drive up business revenues and stock prices.

Manufacturing Index— The Manufacturing Index is a barometer for the sector's health. An increasing index demonstrates that the industry is growing, which can lead to increased employment and consumer spending.

Housing Market Indicators— The housing market is often a reliable indicator of overall economic health. New housing construction starts suggest that builders are optimistic about future sales, which can translate into increased economic activity and potentially higher stock prices.

In conclusion, understanding and tracking these economic indicators are essential when making investment decisions, as each provides insights into an economy's overall health and direction. By analyzing these indices, investors can more accurately predict changes in business cycles and adjust their strategies accordingly.

Whether you're a seasoned investor or a novice, it's vital to work with your financial professional and monitor these economic indicators as you work toward your goals.