See Also:
Consumer Price Index
Stagflation
Balance of Payments
What are the Twin Deficits?
The Feds Beige Book

Economic Indicators Definition

Economic indicators are macroeconomic data that describe the condition of an economy. So, use them to determine whether an economy is prosperous and expanding or troubled and contracting.
For example, a high unemployment rate and a contracting GDP are considered signs of a troubled economy, such as a recession. In comparison, high levels of consumer confidence and rising stock market indexes are signs of a prospering economy.
Economists, investors, and policy makers use economic indicators to discern the health of the economy. Then they try to forecast changes in the business cycle.

Types of Economic Indicators

There are three types of economic indicators: leading indicators, lagging indicators, and coincident indicators.

Leading Indicators

Leading indicators considered predictors of economic trends. Analysts use these data to try to forecast changes in the business cycle. Examples of leading indicators include the following:

• Stock prices
• Building permits
• Average weekly initial claims for unemployment insurance
• An index of consumer expectations

Coincident Indicators

Coincident indicators fluctuate simultaneously with the business cycle and reflect the current condition of the economy. Examples of coincident indicators include the following:

• Industrial production data
• Nonagricultural payroll data
• Manufacturing and trade sales data

Lagging Indicators

Lagging indicators appear after the completion of economic trends and changes in the business cycle. Use them to analyze the economy in retrospect or to confirm other economic data. Examples of lagging indicators include the following:

• Average duration of unemployment
• Average prime rate charged by banks
• Change in labor cost per unit of output

Economic Indicator Sources

The most reliable and closely-watched economic indicators are published by government or non-profit organizations, such as the Conference Board, the Federal Reserve System, the Bureau of Labor Statistics, and other organizations. These organizations issue economic data periodically.
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Economic Data Online

Economic indicator data can be found at the following websites:
Conference Board Index: conference-board.org/economics
Federal Reserve System: federalreserve.gov