Lagging economic indicator is economic indicators that move after the economic activity has already changed. They confirm a change in the economy. It contrasts with leading indicators, which predict the future movement of economic activity.
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The unemployment rate is an example. It declines after the economic activity has already increased and rises after the economic activity has contracted. Some typical cases are inventories, loan outstanding, labor costs, and bank prime lending rates. In the United States, typical examples of lagging indicators are:
- The average duration of unemployment
- Inventories to sales ratio, manufacturing, and trade
- Labor cost per unit of output, manufacturing
- Average prime rate
- Commercial and industrial loans
- Consumer installment credit to personal income ratio
- The consumer price index for services