While the indicators can be numerous, there are three broad categories of economic indicators: Leading indicators, such as consumer durables, net business formations and share prices, are used to predict the future movements of an economy.
Classification by timing[ edit ] Equities as leading, GDP as coincident, and business credit as lagging indicator. Economic indicators can be classified into three categories according to their usual timing in relation to the business cycle: Leading indicators[ edit ] Leading indicators are indicators that usually, but not always, change before the economy as a whole changes.
Stock market returns are a leading indicator: Other leading indicators include the index of consumer expectations, building permits, and the money supply.
The Conference Board publishes a composite Leading Economic Index consisting of ten indicators designed to predict activity in the U.
Average weekly jobless claims for unemployment insurance — The CB reverses the value of this component from positive to negative because a positive reading indicates a loss in jobs. The initial jobless-claims data is more sensitive to business conditions than other measures of unemployment, and as The key economic indocator leads the monthly unemployment data released by the U.
The new orders decrease inventory and contribute to unfilled orders, a precursor to future revenue. Vendor performance slower deliveries diffusion index — This component measures the time it takes to deliver orders to industrial companies.
Vendor performance leads the business cycle because an increase in delivery time can indicate rising demand for manufacturing supplies.
This diffusion index measures one-half of the respondents reporting no change and all respondents reporting slower deliveries. Building permits for new private housing units. Corporate equities as leading indicator with respect to GDP. Here, M2 is adjusted for inflation by means of the deflator published by the federal government in the GDP report.
Bank lending, a factor contributing to account deposits, usually declines when inflation increases faster than the money supply, which can make economic expansion more difficult.
Thus, an increase in demand deposits will indicate expectations that inflation will rise, resulting in a decrease in bank lending and an increase in savings.
Interest rate spread year Treasury vs. Federal Funds target — The interest rate spread is often referred to as the yield curve and implies the expected direction of short- medium- and long-term interest rates. Changes in the yield curve have been the most accurate predictors of downturns in the economic cycle.
This is particularly true when the curve becomes inverted, that is, when the longer-term returns are expected to be less than the short rates. Index of consumer expectations — This is the only component of the leading indicators that is based solely on expectations.
This component leads the business cycle because consumer expectations can indicate future consumer spending or tightening. Equities- This is also a leading indicator. Lagging indicators[ edit ] Lagging indicators are indicators that usually change after the economy as a whole does.
Typically the lag is a few quarters of a year. The unemployment rate is a lagging indicator: In finance, Bollinger bands are one of various lagging indicators in frequent use.An economic indicator is a statistic about an economic activity. Economic indicators allow analysis of economic performance and predictions of future performance.
One application of economic indicators is the study of business cycles. The economic indicators displayed by the report clearly showed a promising future in the region given the upward trend of the graph. 17 people found this helpful Knowing what the economic indicators of a future change are will help you to be two steps ahead of your competition.
Choose between two tables: one covering output, prices and jobs; the other offering trade, exchange and interest rates.
Select regional and economic country groupings, such as the G20 and the BRICS beneath the "All" menu. Sort columns by country or rank by category. Read chapter 4 Transportation Indicators of Economic Growth: A transportation indicator is a measure of change over time in the transportation system or i Login Register Cart Help Key Transportation Indicators: Summary of a Workshop ().
Economic Indicators (Time Series: various years - present) The Economic Indicator Time Series Database is now available via the API. The Census Bureau releases fourteen different reports on key economic indicators. Each indicator is released on a specific schedule.
A leading indicator is a measurable economic factor that can be used to predict which way markets or economies may go in the future.