I have been blogging a series of posts called Eye Crosser which feature financial concepts or terms. With the Economic Indicator definitions that I will be posting, I will call them “By the Numbers.” Economic indicators are considered either leading or lagging indicators suggesting that they indicate an oncoming event(s) or situation is developing OR confirm the recent conclusion or resolution of the particular event(s) or situation.
Examples of Leading Economic Indicators are: inventory levels, retail sales, building permits
Examples of Lagging Economic Indicators are: unemployment rate, consumer price index
The Federal Reserve Bank along with economists employed by banks, corporations, think tanks, etc., use a compilation of these economic indicators to do their forecasting and/or predicting. You have heard many of these concepts used when listening to interviews on financial programs, news shows, or at investor presentations.
As all my other postings, it’s an attempt to clean the economic windows and aid us in understanding a little better what’s “going on” in the financial markets. A clearer understanding of the economic indicators helps us to see how “they” got the numbers that “they” quote us.
Incidentally, to make the economic puzzle even more confusing to understand (solve), these economic indicators may be used in combination to form an accurate economic picture for a particular moment in time. Maybe some of these will be eye crossers but I make no promises!