Lagging Economic Indicators
Lagging economic indicators are economic measures that tend to change after the overall economy has already begun to follow a particular pattern or trend. These indicators are typically used to confirm a trend that has already been established, rather than to predict future economic activity. Examples of lagging economic indicators include the unemployment rate, consumer price index, and gross domestic product (GDP).
History of Lagging Economic Indicators
The concept of lagging economic indicators was first developed in the 1950s by economist Arthur Okun. Okun argued that economic indicators could be divided into two categories: leading and lagging. Leading indicators are those that tend to change before the overall economy begins to follow a particular pattern or trend. Lagging indicators, on the other hand, tend to change after the overall economy has already begun to follow a particular pattern or trend. Okun’s theory was later refined by economist John F. Kennedy, who argued that lagging indicators could be used to confirm a trend that has already been established, rather than to predict future economic activity.
Comparison of Lagging Economic Indicators
| Indicator | Description |
|---|---|
| Unemployment Rate | The percentage of the total labor force that is unemployed and actively seeking employment. |
| Consumer Price Index | A measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. |
| Gross Domestic Product | The total value of goods and services produced within a country in a given period of time. |
Summary
Lagging economic indicators are economic measures that tend to change after the overall economy has already begun to follow a particular pattern or trend. These indicators are typically used to confirm a trend that has already been established, rather than to predict future economic activity. Examples of lagging economic indicators include the unemployment rate, consumer price index, and gross domestic product (GDP). For more information on lagging economic indicators, visit the websites of the U.S. Bureau of Labor Statistics, the U.S. Department of Commerce, and the U.S. Federal Reserve.
See Also
- Leading Economic Indicators
- Business Cycle
- Inflation
- Recession
- Gross Domestic Product
- Consumer Price Index
- Unemployment Rate
- Interest Rates
- Balance of Trade
- Money Supply
