Economic Indicators: The Leading and Lagging

May 2009 //
Cycles
Risk vs. Volitility
History
Economics

. . . the unemployment rate typically peaks either at the end of a recession or after its end. That’s why unemployment is called a “lagging” economic indicator. (The stock market, which normally improves before the economy does, is a “leading” indicator.). ... If you focus on unemployment rates, you will typically be late to stock market rallies. If you focus on stock prices more than company fundamentals, you will probably find yourself whipsawed by normal market volatility.