Monday, January 3, 2011

Lagging Economic Indicator

A lagging economic indicator is a statistic or metric that tends to lag behind economic activity (as measured by GDP growth). For example the unemployment rate will tend to lag an economic cycle, as will (almost by consequence) consumer confidence, and sometimes savings rates. Lagging indicators can be useful for confirming economic trends, but due to their lagging nature, give more of a 'rear vision mirror' view point. However lagging indicators may give insights into some of the fundamentals and underlying trends occurring during the cycle e.g. spare capacity. The opposite of a lagging indicator is a leading indicator, which predicts future economic activity.

Synonyms: Lagging Indicator

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