What is a Lagging Indicator?
Economic indicators are events that give information about the economy as a whole. They are used to analyze economic behavior and predict how the economy will act in the near future. There are three main types of economic indicator: coincident, leading, and lagging indicators. A coincident indicator happens in tandem with an economic event. Company payrolls are coincident indicators, for example, because they make payment and simultaneously increase the localized economy. Leading indicators are events which happen immediately before an economic shift. The state of the major stock markets is one of the major leading indicators in the global economy. A strong stock market indicates a strengthening economy, whereas a weak stock market indicates an economic downturn. A lagging indicator is an event which happens after the corresponding economic cause occurs. An example of a closely monitored lagging indicator is the unemployment rate of a country. As the economy weakens, the unemployment r
