What Is an Economic Indicator Forecast?

Economic indicator forecasts help predict the direction of the economy.

Forecasting helps economists and business analysts estimate future economic conditions based on leading indicators--data that show changes ahead in the overall economy. These indicators help forecast the direction of the economy.

Types

Examples of leading indicators used in economic forecasts include factory orders for goods, number of building permits issued, average weekly work hours and consumer confidence measures.

Identification

The Conference Board, a non-government organization, publishes the Index of Leading Indicators, an importance source of leading indicator data.

Significance

The Index of Leading Indicators has a reliable track record of predicting recessions in the U.S. economy.

Function

Many economists in government agencies, banking and finance, and industry use leading indicators to forecast the economy's future. Forecasts can help guide public policy, investment, and business decisions.

Expert Insight

The U.S. Department of Commerce releases other types of leading indicators used in forecasting, such as residential housing starts.

References

• Conference Board: Business Cycle Indicators Handbook

Resources

• Conference Board
• U.S. Department of Commerce: Bureau of Economic Analysis