Leading and Lagging Indicators

Leading and lagging indicators are tools used to evaluate the health of an economy or business. Leading indicators predict future performance—they change before the economy or business cycle shifts, helping anticipate trends. Examples include stock market trends or new orders for goods. Lagging indicators reflect past performance and confirm long-term trends, such as unemployment rates or GDP growth. They change after the economy has already shifted. Together, these indicators help analysts and decision-makers understand current conditions and forecast future economic activity.