Indexes of Leading, Lagging, and Coincident Indicators
IF A MARKET ECONOMIST were given one wish, it might be for a single indicator that would consistently predict both the direction and the pace of the economy. Unfortunately, none has so far been discovered that fits the entire bill. Some indicators are wonderful at pinpointing levels of activity but fail to depict trends. Others excel at identifying particular areas of economic strength and weakness but can’t measure broad-based performance.
Unable to find a single omnipotent indicator, economists have taken an assortment of those showing the most predictive accuracy and combined them into the index of leading economic indicators (LEI), or the leading index. This index is one of three composite ...