Individual Stocks

Understanding Financial Markets

What is a “key” or “leading” economic indicator?

You can read many statistics that illuminate the overall health of the activity of an economic system. These statistics, often referred to as key economic indicators or leading economic indicators, are widely published by many sources, including government organizations, research centers, and companies engaged in actively tracking the progress of many economic systems, or specific sectors within an economy. Some of the more important ones include: indexes of various investment vehicles, profit/earnings reports of key companies, unemployment rate, rate of people quitting their jobs, housing starts, Consumer Price Index (CPI), Consumer Leverage Ratio, Producer Price Index, industrial production, bankruptcy reports (both individual and corporate), Internet penetration, retail sales, interest rates, and changes in the supply of money. Of the hundreds or perhaps thousands of data points released or known in an economic system, some data points may be important to understanding an economy’s health. These data points may also indicate the changes that happen in an economy before the entire economy undergoes a change, especially in the short- to medium-term.


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