Lagging, Coincident and Leading Indicators
All the above three are economic indicators showing/predicting past, current and predicted economic trend of a country or market. They can be very useful tools for investors and long-term traders if interpreted correctly. Lagging, coincident and leading indicators are prepared from economic data collected/released by government or non profit organizations, like GDP growth, unemployment rates, agricultural and industrial performance, crude oil and metal price, currency exchange rate, etc. They can be used independently or in conjunction.
1. Lagging Indicator
Lagging indicator confirms long-term economic trends, or is the indicator of near-past economy performance. It takes consideration of factors like GDP, unemployment, labor costs, corporate profits, interest rates, etc.
2. Coincident Indicator
Coincident indicator shows current economic state and changes with changes in economy. It takes consideration of factors like personal income, industrial production and employment, etc.
3. Leading Indicator
Leading indicator predicts economic trends. It takes consideration of factors like bond yields, building permits, money supply, production workweek, stock prices, unemployment insurance claims, long and short interest rate spreads, etc. Remember the prediction is not always accurate.
The Conference Board publishes composite index of all other three above indicators, and is a reliable index to investors.
1. Lagging Indicator
Lagging indicator confirms long-term economic trends, or is the indicator of near-past economy performance. It takes consideration of factors like GDP, unemployment, labor costs, corporate profits, interest rates, etc.
2. Coincident Indicator
Coincident indicator shows current economic state and changes with changes in economy. It takes consideration of factors like personal income, industrial production and employment, etc.
3. Leading Indicator
Leading indicator predicts economic trends. It takes consideration of factors like bond yields, building permits, money supply, production workweek, stock prices, unemployment insurance claims, long and short interest rate spreads, etc. Remember the prediction is not always accurate.
The Conference Board publishes composite index of all other three above indicators, and is a reliable index to investors.
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posted by Daniel Pipitone at
8:27 AM
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