- Statistic used to determine the state of general economic activity or to predict it in the future.A leading indicator is one that tends to turn up or down before the general economy does (e.g., building permits, common stock prices, and business inventories). Coincident indicators move in line with the economy; lagging indicators change direction after the economy does.
* * *statistic used, along with other indicators, in an attempt to determine the state of general economic activity, especially in the future. A “leading indicator” is one of a statistical series that fairly reliably turn up or down before the general economy does. Common leading indicators are building permits (suggesting the future volume of new construction), common stock prices, business inventories, consumer installment debt, unemployment claims, and corporate profits. Other types of indicators normally move in line with the overall economy (“coincident indicator”) or change direction after the economy does (“lagging indicator”). Many types of sales are examples of coincident indicators because they peak or bottom out as the economy does. Lagging indicators are useless for prediction; the value of construction completed, for example, is outdated, for the main economic effects of the construction occurred earlier when the plans were made and construction actually carried on.
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