Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Macro Environment

What it is:

A macro environment is a wide, broad set of economic conditions rather than the conditions in a specific sector or industry within an economy.

How it works (Example):

The macro environment in the American economy, for example, revolves largely around the business cycle and includes trends in inflation, employment, gross domestic output or other factors that measure and encompass conditions throughout the whole economy. Industries and sectors may influence the macro environment, as the housing bubble did in 2008, but measures of the macro environment go far beyond any one segment of the economy.

Why it Matters:

The macro environment can determine whether businesses will expand, whether consumers will spend more, whether seniors will have enough for retirement, whether homelessness will rise and many other broader issues. In turn, the macro environment can advance or deter government policy, regulatory changes and even encourage or discourage entrepreneurship. Additionally, many businesses wax and wane with the business cycle and thus are very attentive to macro environmental conditions.