What is a Lagging Economic Indicator?

If the economy experiences a change of some character, then in order to measure the consequent changes a lagging indicator is applied. However, lagging indicators doesn't provide a good measure for the future condition of the economy. On the other hand, it is commonly used for establishing a potential trend.

An example of a lagging indicator is unemployment. It is commonly used to see whether companies are expecting any positive or negative change in the economy. As a result, bad expectations of companies usually result in higher unemployment rates.

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