leading indicators definition

leading indicators

Measurable factors of economic performance that change before (ahead of) the underlying economic cycle starts to follow a particular direction or trend. Since these statistics precede (by one to 12 months) other changes in economic activity, they are used to forecast the forthcoming pattern of the overall economy. Major leading indictors include orders for durable goods, orders for plant and equipment, new housing starts, change in raw material prices, corporate profits and share prices, business formation and failures, and money supply (M2).

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