An economic indicator (or business indicator) is a statistic about the economy. Economic indicators allow analysis of economic performance and predictions of future performance. One application of economic indicators is the study of business cycles.

Economic indicators include various indices, earnings reports, and economic summaries. Examples: unemployment rate, quits rate, housing starts, Consumer Price Index (a measure for inflation), Consumer Leverage Ratio, industrial production, bankruptcies, Gross Domestic Product, broadband internet penetration, retail sales, stock market prices, money supply changes.

The leading business cycle dating committee in the United States of America is the National Bureau of Economic Research (private). The Bureau of Labor Statistics is the principal fact-finding agency for the U.S. government in the field of labor economics and statistics. Other producers of economic indicators includes the United States Census Bureau and United States Bureau of Economic Analysis.

Economic indicators can be classified into three categories according to their usual timing in relation to the business cycle:

• Leading indicators are indicators that usually change before the economy as a whole changes. They are therefore useful as short-term predictors of the economy. Stock market returns are a leading indicator: the stock market usually begins to decline before the economy as a whole declines and usually begins to improve before the general economy begins to recover from a slump.
• Lagging indicators are indicators that usually change after the economy as a whole does. Typically the lag is a few quarters of a year. The unemployment rate is a lagging indicator: employment tends to increase two or three quarters after an upturn in the general economy.
• Coincident indicators are those which change at approximately the same time as the whole economy, thereby providing information about the current state of the economy. Personal income, GDP, industrial production and retail sales are coincident indicators. A coincident index may be used to identify, after the fact, the dates of peaks and troughs in the business cycle.^[1]

There are also three terms that describe an economic indicator's direction relative to the direction of the general economy:

• Procyclic indicators move in the same direction as the general economy: they increase when the economy is doing well; decrease when it is doing badly. Gross Domestic Product (GDP) is a procyclic indicator.
• Countercyclic indicators move in the opposite direction to the general economy. The unemployment rate is countercyclic: it rises when the economy is decreasing.
• Acyclic indicators are those with little or no correlation to the business cycle: they may rise or fall when the general economy is doing well, and may rise or fall when it is not doing well.^[2]

Additional specialized indicators (e.g. Consumer Leading Indicators) exist that focus more closely on one segment of the economy.

[edit] See also

• Economic calendar
• Economic data
• List of economic reports by U.S. government agencies
• Big Mac Index
• Bureau of Labor Statistics
• CAPRI model
• Consumer Confidence Index
• Consumer price index
• Consumer Leading Indicators
• Consumer Leverage Ratio
• Core inflation
• The Conference Board
• Fundamental analysis
• Genuine Progress Index
• Gross domestic product
• Inflation
• Lipstick effect
• Misery index (economics)
• SET Index
• Table of economic indicators

[edit] References

[edit] External links

• U.S. Bureau of Labor Statistics
• A Beginner's Guide to Economic Indicators
• Investopedia Economic Indicators: An Overview
• OECD indicators
• Consumer Leading Indicators - Consumer Metrics Institute