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5. Economic Indicators

i. interpret a set of economic indicators and describe their uses and limitations.

What are economic indicators? Economic indicators are statistics on macroeconomic variables that help in understanding which stage of the business cycle an economy is in.

What are the three types of economic indicators? - Leading: Leading economic indicators are indicators which change before the economy changes. - Lagging: A lagging economic indicator is one that does not change direction until a few quarters after the economy does. - Coincident: A coincident economic indicator is one that simply moves at the same time the economy does. The Gross Domestic Product is a coincident indicator.

What is the Conference Board’s diffusion index? The diffusion index can measure the breadth of a move in any business cycle index (BCI), showing how many of an index’s components are moving together with the overall index.