The economy
Leading indicator
A statistic that tends to change before the wider economy does.
How it works
Purchasing managers’ surveys, new orders, building permits and the yield curve are commonly treated as leading. Employment and GDP are lagging.
They give earlier signals with more false positives. Coincident and lagging indicators confirm what has already happened.
Related terms
- RecessionA significant, broad-based decline in economic activity lasting more than a few months.
- Inverted yield curveWhen short-term bonds yield more than long-term ones — historically a recession warning.
- Economic data releaseScheduled official statistics that move markets when they differ from expectations.
- Gross domestic productThe total value of goods and services an economy produces in a period.
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