Economic Indicators
Statistics classified by their timing relative to the business cycle: leading indicators predict turns, coincident indicators confirm the current phase, and lagging indicators confirm a turn after it happens.
The classic item gives you one statistic and asks which category it belongs to — or hands you four indicators and asks which one is leading. The “tell” is the word predict: leading indicators move before the economy turns, so anything markets watch to anticipate the future (stock prices, building permits, new manufacturing orders, consumer expectations, the money supply M2) is leading. S&P 500 stock prices are the trap — students label them coincident because they reflect “now,” but markets are forward-looking, so they lead. Note the index here is the level used as a forecasting input, not the cap- or price-weighting mechanics tested under market-indices.
The other reliable miss is unemployment: initial jobless claims lead, but the average duration of unemployment lags, and nonfarm payrolls are coincident — same topic, three categories. Don’t conflate this with the business cycle (the phases) or monetary policy (the Fed’s response). Hook: lagging indicators confirm what already happened — the prime rate and CPI move last.
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