economic indicator
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An economic indicator is a
statistic A statistic (singular) or sample statistic is any quantity computed from values in a sample which is considered for a statistical purpose. Statistical purposes include estimating a population Population typically refers the number of people ...

statistic
about an
economic activity Economics () is a social science Social science is the Branches of science, branch of science devoted to the study of society, societies and the Social relation, relationships among individuals within those societies. The term was fo ...

economic activity
. Economic indicators allow analysis of economic performance and
prediction Image:Old Farmer's Almanac 1793 cover.jpg, frame, ''The Old Farmer's Almanac'' is famous in the US for its (not necessarily accurate) long-range weather predictions. A prediction (Latin ''præ-'', "before," and ''dicere'', "to say"), or forecas ...
s of future performance. One application of economic indicators is the study of
business cycle The business cycle, also known as the economic cycle or trade cycle, are the fluctuations of gross domestic product (GDP) around its long-term growth trend. The length of a business cycle is the period of time containing a single boom and contrac ...

business cycle
s. Economic indicators include various indices, earnings reports, and economic summaries: for example, the
unemployment Unemployment, according to the OECD (Organisation for Economic Co-operation and Development), is people above a specified age (usually 15) not being in paid employment or self-employment but currently available for work during the reference peri ...
rate, quits rate (quit rate in American English),
housing startsHousing starts is an economic indicator that reflects the number of privately owned new houses (technically ''housing units'') on which construction has been started in a given period. These data are divided into three types: Single-family detached h ...
,
consumer price index#REDIRECT consumer price index A consumer price index measures changes in the price level of a weighted average market basket of Goods, consumer goods and Services marketing, services purchased by households. A CPI is a statistical estimate con ...
(a measure for
inflation In economics, inflation refers to a general progressive increase in prices of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a r ...
),
Inverted yield curve In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and investments. Savers and investors have money avai ...

Inverted yield curve
,
consumer leverage ratio#REDIRECT Consumer leverage ratio The consumer leverage ratio, a concept popularized by William Jarvis and Dr. Ian C MacMillan in a series of articles in the Harvard Business Review, is the ratio of total household debt, as reported by the Federal ...
,
industrial productionIndustrial production is a measure of output of the industrial sector of the economy An economy (from Greek language, Greek οίκος – "household" and νέμoμαι – "manage") is an area of the Production (economics), production, Distri ...
,
bankruptcies Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditor A creditor or lender is a party (e.g., person, organization, company, or government) that has a claim on the services of a second party. ...
,
gross domestic product Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced in a specific time period. List of countries by GDP (nominal) per capita, GDP (nominal) per capita does not, however, reflect ...
, broadband internet penetration,
retail sales Retail is the process of selling consumer goods A final goods or consumer goods is a commodity that is used by the consumer to satisfy current wants or needs, unlike intermediate goods which is utilized to produce another goods. A microwave o ...
,
price index A price index (''plural'': "price indices" or "price indexes") is a normalized average (typically a weighted average) of price A price is the (usually not negative) quantity of payment or compensation given by one party to another in re ...
, and
money supply In macroeconomics, the money supply (or money stock) refers to the total volume of money held by the public at a particular point in time in an economy. There are several ways to define "money", but standard measures usually include Circulati ...
changes. The leading business cycle dating committee in the
United States of America The United States of America (USA), commonly known as the United States (U.S. or US), or America, is a country Contiguous United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., federal di ...

United States of America
is the private
National Bureau of Economic Research The National Bureau of Economic Research (NBER) is an American private nonprofit A nonprofit organization (NPO), also known as a non-business entity, not-for-profit organization, or nonprofit institution, is a legal entity organized and oper ...
. The
Bureau of Labor Statistics The Bureau of Labor Statistics (BLS) is a unit of the United States Department of Labor The United States Department of Labor (DOL) is a cabinet-level department of the U.S. federal government responsible for occupational safety and health, w ...
is the principal fact-finding agency for the U.S. government in the field of labor economics and statistics. Other producers of economic indicators includes the
United States Census Bureau The United States Census Bureau (USCB), officially the Bureau of the Census, is a principal agency of the U.S. Federal Statistical System, responsible for producing data about the American American(s) may refer to: * American, something of, f ...
and United States
Bureau of Economic Analysis The Bureau of Economic Analysis (BEA) of the United States Department of Commerce The United States Department of Commerce is an executive department The United States federal executive departments are the principal units of the Federal go ...
.


Classification by timing

Economic indicators can be classified into three categories according to their usual timing in relation to the business cycle: leading indicators, lagging indicators, and coincident indicators.


Leading indicators

Leading indicators are indicators that usually, but not always, change before the economy as a whole changes. They are therefore useful as short-term predictors of the economy. Leading indicators include the index of consumer expectations, building permits, and the money supply.
The Conference Board The Conference Board, Inc. is a 501(c) organization, 501(c)(3) non-profit business membership and research group organization. It counts over 1,000 public and private corporations and other organizations as members, encompassing 60 countries. The ...
publishes a composite Leading Economic Index consisting of ten indicators designed to predict activity in the U. S. economy six to nine months in future. Components of the Conference Board's Leading Economic Indicators Index #Average weekly hours (manufacturing) — Adjustments to the working hours of existing employees are usually made in advance of new hires or layoffs, which is why the measure of average weekly hours is a leading indicator for changes in unemployment. #Average weekly initial jobless claims for
unemployment insurance Unemployment benefits, also called unemployment insurance, unemployment payment, unemployment compensation, or simply unemployment, are payments made by authorized bodies to unemployed people. In the United States, benefits are funded by a compul ...
— 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 such leads the monthly unemployment data released by the U.S. Department of Labor. #Manufacturers' new orders for consumer goods/materials — This component is considered a leading indicator because increases in new orders for consumer goods and materials usually mean positive changes in actual production. 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. Vendor performance is measured by a monthly survey from the National Association of Purchasing Managers (NAPM). This diffusion index measures one-half of the respondents reporting no change and all respondents reporting slower deliveries. #Manufacturers' new orders for non-defense
capital goods Capital most commonly refers to: * Capital letter, an upper-case letter in any type of writing * Capital city, the area of a country, province, region, or state, regarded as enjoying primary status, usually but not always the seat of the gover ...
— As stated above, new orders lead the business cycle because increases in orders usually mean positive changes in actual production and perhaps rising demand. This measure is the producer's counterpart of new orders for consumer goods/materials component (#3). #Building permits for new private housing units. #Stock prices of 500 common stocks — Equity market returns are considered a leading indicator because changes in stock prices reflect investors' expectations for the future of the economy and interest rates. #Money Supply (M2) — The
money supply In macroeconomics, the money supply (or money stock) refers to the total volume of money held by the public at a particular point in time in an economy. There are several ways to define "money", but standard measures usually include Circulati ...
measures demand deposits, traveler's checks, savings deposits, currency, money market accounts, and small-denomination
time deposit A time deposit or term deposit (in the United States The United States of America (USA), commonly known as the United States (U.S. or US), or America, is a country Contiguous United States, primarily located in North America. It consists o ...
s. 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 (10-year Treasury vs. Federal Funds target) — The
interest rate An interest rate is the amount of interest In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and investm ...
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 In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and investments. Savers and investors have money avai ...

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. The data for this component comes from the
University of Michigan , mottoeng = "Arts, Knowledge, Truth" , former_names = Catholepistemiad, or University of Michigania (1817–1821) , budget = $8.99 billion (2018) , endowment = $17 billion (2021)As of October 25, 2021. ...

University of Michigan
's Survey Research Center, and is released once a month.


Lagging indicators

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: employment tends to increase two or three quarters after an upturn in the general economy. In finance,
Bollinger bands
Bollinger bands
are one of various lagging indicators in frequent use. In a performance measuring system, profit earned by a business is a lagging indicator as it reflects a historical performance; similarly, improved customer satisfaction is the result of initiatives taken in the past. The Index of Lagging Indicators is published monthly by
The Conference Board The Conference Board, Inc. is a 501(c) organization, 501(c)(3) non-profit business membership and research group organization. It counts over 1,000 public and private corporations and other organizations as members, encompassing 60 countries. The ...
, a non-governmental organization, which determines the value of the index from seven components. The Index tends to ''follow'' changes in the overall economy. The components on the Conference Board's index are: * The average duration of
unemployment Unemployment, according to the OECD (Organisation for Economic Co-operation and Development), is people above a specified age (usually 15) not being in paid employment or self-employment but currently available for work during the reference peri ...
(inverted) * The value of outstanding commercial and industrial
loan In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations etc. The recipient (i.e., the borrower) incurs a debt and is usually liable to pay interest on that debt ...
s * The change in the
Consumer Price Index#REDIRECT consumer price index A consumer price index measures changes in the price level of a weighted average market basket of Goods, consumer goods and Services marketing, services purchased by households. A CPI is a statistical estimate con ...
for services * The change in labour cost per unit of output * The ratio of manufacturing and trade inventories to sales * The ratio of consumer credit outstanding to personal income * The average
prime rate A prime rate or prime lending rate is an interest rate An interest rate is the amount of interest Interest, in finance and economics, is payment from a debtor, borrower or deposit-taking financial institution to a lender or depositor of an amou ...
charged by banks


Coincident indicators

Coincident indicators change at approximately the same time as the whole economy, thereby providing information about the current state of the economy. There are many coincident economic indicators, such as
Gross Domestic Product Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced in a specific time period. List of countries by GDP (nominal) per capita, GDP (nominal) per capita does not, however, reflect ...
, industrial production, personal income and retail sales. A coincident index may be used to identify, after the fact, the dates of peaks and troughs in the business cycle. There are four economic statistics comprising the Index of Coincident Economic Indicators: * Number of employees on non-agricultural
payroll A payroll is the list of employees of some company that is entitled to receive payments as well as other work benefits and the amounts that each should receive. Along with the amounts that each employee should receive for time worked or tasks per ...
s *
Personal income In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods an ...

Personal income
less transfer payments * Industrial production * Manufacturing and trade sale The Philadelphia Federal Reserve produces state-level coincident indexes based on 4 state-level variables: * Nonfarm payroll employment * Average hours worked in manufacturing *
Unemployment rate Unemployment, according to the OECD The Organisation for Economic Co-operation and Development (OECD; french: Organisation de Coopération et de Développement Économiques, OCDE) is an intergovernmental organization, intergovernmental eco ...

Unemployment rate
* Wage and salary disbursements deflated by the consumer price index (U.S. city average)


By direction

There are also three terms that describe an economic indicator's ''direction'' relative to the direction of the general economy: ; Procyclical indicators: move in the same direction as the general economy: they increase when the economy is doing well; decrease when it is doing badly.
Gross domestic product Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced in a specific time period. List of countries by GDP (nominal) per capita, GDP (nominal) per capita does not, however, reflect ...
(GDP) is a procyclic indicator. ;
Countercyclical Procyclical and countercyclical variables are variables that fluctuate in a way that is positively or negatively correlated with business cycle The business cycle, also known as the economic cycle or trade cycle, are the fluctuations of gross do ...
indicators: move in the opposite direction to the general economy. The
unemployment rate Unemployment, according to the OECD The Organisation for Economic Co-operation and Development (OECD; french: Organisation de Coopération et de Développement Économiques, OCDE) is an intergovernmental organization, intergovernmental eco ...

unemployment rate
and the
wage share In economics, the wage or labor share is the part of national income, or the income of a particular economic sector, allocated to wages (labor (economics), labor). It is related to the capital or profit share, the part of income going to capital (e ...
are countercyclic: in the short run they rise when the economy is deteriorating. ;
Acyclic Acyclic may refer to: * In chemistry, a compound which is an open-chain compound, e.g. alkanes and acyclic aliphatic compounds * In mathematics: ** A graph without a Cycle (graph theory), cycle, especially *** A directed acyclic graph ** An acyclic ...
al indicators: are those with little or no correlation to the business cycle: they may rise or fall when the general economy is doing well, and may rise or fall when it is not doing well.


Local indicators

Local governments often need to project future tax revenues. The city of San Francisco, for example, uses the price of a one-bedroom apartment on Craigslist, weekend subway ridership numbers, parking garage usage, and monthly reports on passenger landings at the city's airport.


See also

* Big Mac Index *
Bureau of Labor Statistics The Bureau of Labor Statistics (BLS) is a unit of the United States Department of Labor The United States Department of Labor (DOL) is a cabinet-level department of the U.S. federal government responsible for occupational safety and health, w ...
* CAPRI model * Consumer confidence index * Consumer leverage ratio * Consumer price index * Core inflation * Economic data * Fundamental analysis * Genuine Progress Index *
Gross domestic product Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced in a specific time period. List of countries by GDP (nominal) per capita, GDP (nominal) per capita does not, however, reflect ...
* Hemline index * Inflation * Lipstick effect * List of economic reports by U.S. government agencies * Misery index (economics) *
The Conference Board The Conference Board, Inc. is a 501(c) organization, 501(c)(3) non-profit business membership and research group organization. It counts over 1,000 public and private corporations and other organizations as members, encompassing 60 countries. The ...


References


External links


OECD Economic IndicatorsEconomic Indicators Mobile AppU.S. Bureau of Labor StatisticsThe Conference Board - Economic IndicatorsFED101 - Economic IndicatorsInternational Conference on Indicators and Survey MethodologyEconomic Indicators
Monthly analysis from American Institute for Economic Research (AIER)
U.S. Economic Indicators United States Economic Indicators (current and historical, open data)
- Quandl
GPO Economic Indicators
{{DEFAULTSORT:Economic Indicator Economic indicators, Indicators