An economic indicator (or business indicator) is a statistic about the economy. Economic
indicators allow analysis of economic performance and predictions of future performance. One
application of economic indicators is the study of business cycles.
Economic indicators include various indexes, earnings reports, and economic summaries.
Examples: unemployment rate, quits rate, housing starts, Consumer Price Index (a measure for
inflation), Consumer Leverage Ratio, industrial production, bankruptcies, Gross Domestic
Product, broadband internet penetration, retail sales, stock market prices, money supply changes.
The leading business cycle dating committee in the United States of America is the National
Bureau of Economic Research (private). The Bureau of Labor Statistics 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 and United States
Bureau of Economic Analysis.
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 change before the economy as a whole changes.
They are therefore useful as short-term predictors of the economy. Stock market returns are a
leading indicator: the stock market usually begins to decline before the economy as a whole
declines and usually begins to improve before the general economy begins to recover from a
slump. 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. S. economy six
to nine months in future.
 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 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
The Index of Lagging Indicators is published monthly by The Conference Board, a non-
governmental organization, which determines the value of the index from seven economic
variables. These components tend to follow changes in the overall economy.
The components are:
The average duration of unemployment (inverted)
The value of outstanding commercial and industrial loans
The change in the Consumer Price Index 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 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, 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
Number of employees on non-agricultural payrolls
Personal income less transfer payments
Manufacturing and trade sale
The Philadelphia Federal Reserve produces state-level coincident indexes based on 4 state-level
Nonfarm payroll employment
Average hours worked in manufacturing
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:
Procyclic 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 (GDP) is a
Countercyclic indicators move in the opposite direction to the general economy. The
unemployment rate is countercyclic: it rises when the economy is decreasing.
Acyclic 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.