Leading Economic Indicators

Leading Economic Indicators: Essentially economic indicators are important statistic that help experts in analysing economic performance of a country and also provide valuable insight in predicting future performances.

Economic indicators are classified into 3 major categories called leading, lagging and coincident indicators. The Leading Indicators are the ones that change before the economy changes on the whole and hence are called short term predictors.

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An important example of a leading economic indicator is the stock market. The stock market generally goes down before an economy declines and rises up as soon as an economy gears itself for improvement.

There are various other indicators that count including building permits for private housing; money supply (as it measures vast amount of monetary deposits, for instance traveller’s cheques, market accounts and saving deposits) along with the index of consumer expectations. Typically, bond yields prove to be good leading economic indicators as traders can easily speculate trends in the financial market.

Edited and Updated 08th March 2014

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