leading lagging indicators

Building permits for new private housing units

Leading Because most localities require permits before new building can begin, this gauge foretells new construction activity.

S&P 500 Stock Index

Leading Because stock prices anticipate economic turning points, both up and down, their movements offer a useful early signal on economic cycles.

Aggregate real personal income (less transfer payments)

Coincident By measuring the income flow from non-corporate profits and wages, this measure captures the current state of the economy.

Manufacturing and trade sales

Coincident In the same way as aggregate personal income and the industrial production index, this aggregate offers a measure of the current state of business activity.

Industrial Production Index

Coincident Measures industrial output, thus capturing the behavior of the most volatile part of the economy. The service sector tends to be more stable.

Employees on non-agricultural payrolls

Coincident Once recession or recovery is clear, businesses adjust their fulltime payrolls.

Change in unit labor costs

Lagging Because businesses are slow to fire workers, these costs tend to rise into the early stages of recession as the existing workforce is used less intensely. Late in the recovery when the labor market gets tight, upward pressure on wages can also raise such costs. In both cases, there is a clear lag at cyclical turns.

Average Duration of Unemployment

Lagging Because businesses wait until downturns look genuine to lay off, and wait until recoveries look secure to rehire, this measure is important because it lags the cycle on both the way down and the way up.

Ratio of consumer installment debt to income

Lagging Because consumers only borrow heavily when confident, this measure lags the cyclical upturn, but debt also overstays cyclical downturns because households have trouble adjusting to income losses, causing it to lag in the downturn.

Inventory-sales ratio

Lagging Because inventories accumulate as sales initially decline and then, once a business adjusts its ordering, become depleted as sales pick up, this ratio tends to lag the cycle.

Commercial and industrial loans outstanding

Lagging Because these loans frequently support inventory building, they lag the cycle for much the same reason that the inventory-sales ratio does.

Average bank prime lending rate

Lagging Because this is a bank administered rate, it tends to lag other rates that move either before cyclical turns or with them.

Change in consumer price index for services

Lagging Inflation generally adjusts to the cycle late, especially the more stable services area.

Manufacturers' new orders for consumer goods and materials

Leading Because businesses cannot wait too long to meet demands for consumer goods or materials without ordering, these gauges tend to lead at upturns and downturns. Indirectly, they capture changes in business sentiment as well, which also often leads the cycle.

Interest rate spread between 10-year treasury yields and overnight borrowing rates (federal funds rate)

Leading Because long-term yields express market expectations about the direction of short-term interest rates, and rates ultimately follow the economic cycle up and down, a wider spread, by anticipating short rate increases, also anticipates an economic upswing. Conversely, a narrower spread, by anticipating short rate decreases, also anticipates an economic downturn.

Money supply, real M2

Leading Because money supply growth measures the tightness or looseness of monetary policy, increases in money beyond inflation indicate easy monetary conditions and a positive economic response, whereas declines in real M2 indicate monetary restraint and a negative economic response.

Index of Consumer Expectations, University of Michigan

Leading Because the consumer is about two-thirds of the US economy and will spend more or less freely according to his or her expectations, this gauge offers early insight into future consumer spending and consequently directions in the whole economy.

Vendor performance, slower deliveries diffusion indexa

Leading By measuring the speed at which businesses can complete and deliver an order, this gauge offers a clear signal of unfolding demands on businesses.

Manufacturers' new orders for non-defense capital goods

Leading In addition to offering a first signal of movement, up or down, in an important economic sector, movement in this area also indirectly captures business expectations.

Average weekly initial claims for unemployment insurance

Leading This measure offers a very sensitive test of initial layoffs and rehiring.

leading or lagging Indicator? Average weekly hours, manufacturing

Leading: Because businesses will cut overtime before laying off workers in a downturn and increase it before rehiring in a cyclical upturn, these measures move up and down before the general economy.