- Leading Indicators: A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators are used to predict changes in the economy, but are not always accurate. Bond yields are typically a good leading indicator of the market because traders anticipate and speculate trends in the economy.
Other types of leading indicators include:
- building permits (new private housing)
- industrial production rates
- money supply
- S&P 500
- average of weekly unemployment insurance claims
- Lagging Indicators: A measurable economic factor that changes after the economy has already begun to follow a particular pattern or trend. Lagging indicators confirm long-term trends, but do not predict them. Interest rates (especially the prime interest rate) are a good lagging indicator; rates change after severe market changes. Other examples are:
- unemployment rates
- corporate profit
- labor cost per unit of output
- Coincident Indicators: An economic factor that varies directly and simultaneously with the business cycle, thus indicating the current state of the economy.
Some examples include:
- nonagricultural employment
- personal income
- inventory/sales ratio
Without further ado, the tutorial Economic Indicators to Know will examine 11 economic indicators we feel investors should understand.
Read more: http://www.investopedia.com/exam-guide/finra-series-6/economic-factors/economic-indicators.asp#ixzz1yhRcBvnR