Leading/Lagging/Coincident indicators

Can someone kindly explain the differences in Leading, Lagging, Coincident indicators. I find it to understand and difficult to remember these. Thanks!

The names are pretty well descriptive:

  • Leading indicators cycle ahead of the overall economy: rising (or, if countercyclical, falling) before the economy rises, falling (or, if countercyclical, rising) before the economy falls. Examples are manufcturing orders, stock prices, and initial unemployment claims (countercyclical).
  • Coincident indicators cycle with the overall economy: rising as the economy rises, falling as the economy falls. Examples are nonagricultrual employment, industrial production, and trade sales.
  • Lagging indicators cycle after the overall economy, rising after the overall economy rises, falling after the overall economy falls. Examples are prime rate, manufacturing labor cost per unit, and CPI for services.

The lists of indicators are amongst the lists you should have tagged for reviewing the last week or two before the exam.

Got it! Thanks so much. You’re too kind!

My pleasure. Hope it helps.

S2000magician sir : is there any way to find out which indicator is leading , lagging or co-incident . Or are we suppose to remember them?? Thanks in advance

I suppose you could go down the list and develop a rationale for why each one falls into a particular category, but I, for one, wouldn’t bother. I’d be content to review the list a few times – including at least once during the last week – and hope that I can remember the important ones.

How are other people studying these - should we just memorize?