• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Penpoin

Better knowledge. Sharper Insight.

  • Management
  • Economics
  • Finance
Economics

Economic indicators

Updated on April 12, 2022 · By Ahmad Nasrudin

Economic indicators
You are here: Home / Economics / Economic indicators

Economic indicators refer to various statistics that represent the activities, conditions, and performance of a country’s economy. Those statistics come from government institutions or private organizations. Not only past and present economic conditions, but some statistics also provide insights on future economic conditions.

Advertisement

Economic growth, exchange rates, inflation, policy rates are examples of key economic statistics. Usually, economists try to predict these variables using several other indicators.

Classification of economic indicators

In literature, economic indicators are divided into three groups. Economists usually use them to explain economic activity, mainly related to an economic cycle.

  1. Leading indicators
  2. Coincident indicators
  3. Lagging indicators

The movement of leading indicators precedes of broader economic turning points. For example, when economic growth falls, this indicator has predicted a decline several months before the release of economic growth data. For this reason, economists use it to predict future economic conditions.

An example is a new order for capital goods. Businesses will usually predict their future demand and profit conditions before deciding to increase production and invest in capital goods. They will order capital goods only if they are optimistic about future growth. And, they will delay it if they are pessimistic. 

Coincident indicators move in tandem with broader economic movement. Economists use it to identify the current condition of the economy.

An example is an industrial production. Its change will usually go hand in hand with economic growth.

Lag indicators move after the economy has changed direction. Economists use it to identify past economic conditions.

Advertisement

The inventory/sales ratio is an example. This ratio responded after the economy moves. Inventory built up after demand drops and shrank after demand begins to increase.

Interpreting and drawing conclusions from many economic variables is a difficult task. Therefore, practitioners develop a composite index, which provides an aggregate perspective on economic conditions. That is known as the Index of Leading Economic Indicators (LEI) or Composite Leading Indicators (CLI).

Economic Growth and Economic Development: Their Differences and Relationships

Economic growth has a close relationship with economic development. We need economic growth to support

Economic Growth: Factors, Importance, Impacts, How to Measure It

Economic growth refers to an increase in output in an economy over time. It can be short term or long term. In the short

Gini Coefficient: Meaning, Calculation Method, Data, Pros, and Cons

What's it: Gini coefficient is a statistic of economic inequality in a society. It tells you the distribution of income

Advertisement

Needs: Definition, Example, Type

What's it: Needs means requiring something because it is essential. For example, we need food, water, and shelter

Wants: Definition and Examples

What's it: Wants are hopes to have or fulfill something. If we want something, we expect to be able to buy it and

Hedge Funds Strategy: Macro, event-driven, relative value, and equity hedge strategies

Hedge funds rely on several strategies to make money. Hedge Fund Research, Inc. (HFRI) divides them into four

Hedge Funds:  Examples And What Do They Do?

What's is: Hedge funds are pooled investment funds by private investors, established in limited partnerships, and

Primary Sidebar

TOPIC

Accounting and Finance Business and Strategy Financial Statements Human Resources Investment Macroeconomics Marketing Microeconomics Operation

Advertisement

LATEST POST

  • Hedge Funds Strategy: Macro, event-driven, relative value, and equity hedge strategies
  • Leveraged Buyout (LBO): How it Works, Funding Sources, Criteria for Target 
  • Private Equity: Examples, Strategies, Targets, Its Ways To Make Money
  • Economic Growth and Economic Development: Their Differences and Relationships
  • Where Do Comparative Advantages Come From?
  • Three Injections In The Economy

MOST POPULAR

  • Business Size: Definition, Measurement, Classification
  • The Role of Business in Society and the Economy
  • Span of Control: Importance, Types, Advantages, Disadvantages
  • Government Intervention: Examples, Reasons, and Impacts
  • Sociocultural Environment: Meaning, Variables, Impact on The Business
  • Public Goods: Meaning, Characteristics, Examples

Footer

SEARCH

POPULAR

  • Business Size: Definition, Measurement, Classification
  • The Role of Business in Society and the Economy
  • Span of Control: Importance, Types, Advantages, Disadvantages
  • Government Intervention: Examples, Reasons, and Impacts
  • Sociocultural Environment: Meaning, Variables, Impact on The Business

TOPIC

Accounting and Finance Business and Strategy Financial Statements Human Resources Investment Macroeconomics Marketing Microeconomics Operation

Copyright © 2023 · About Us  · Privacy Policy and Disclaimer  ·  Terms of Use  ·  Comment Policy  ·  Contact Us