Definition
Leading indicators predict future economic conditions, unlike lagging indicators that confirm past trends. Key leading indicators include the yield curve slope, initial jobless claims, building permits, manufacturing new orders, stock prices, and consumer expectations. The Conference Board Leading Economic Index (LEI) combines 10 components into a single composite leading indicator.
lightbulb Example
The LEI has declined for 6 consecutive months, initial jobless claims are trending upward, and the yield curve is inverted. This confluence of negative leading indicators suggests a recession within the next 6-12 months.
verified_user Key Points
- Predict future economic direction
- Change before the economy follows
- Key: yield curve, jobless claims, building permits
- Conference Board LEI combines 10 components