Leading and Lagging Indicators

Here on Publish0x,  we all know we have a mix of readers, some are found in the Economic / Macro realm and some are in Technical Analysis (TA) domain. So, I will try and include both indicator types in my blog post.  Modern text books do not spell out indicators as anything other than column fodder, never showing them in a manner that would be useful to aid in understanding of economics or how cycles work and potentially where we might be in a cycle.

I hope to shed some light, on the procession and lag of economic events and how the 'indicators' help you understand/digest the economy! It's well known, globally that we are all tied together thru globalization and amounts to the equivalent to Mutually Assured Destruction (MAD). My older readers will recognize the Cold War era term, MAD. Back then it had connotations to Nuclear Weapon destruction, now our result; is the same, we all suffer and perhaps perish.

Economic / Macro Indicators

Lag indicators

• Inflation data tends to lag actually economic conditions. Recall Fed Chair Jay Pow said the Fed was going to wait 8-months prior to raising Interest rates.
• Shelter / OER inflation lags by about18-months
• FOMC Rates are a lagging indicator, producing a Monetary policy has 12-18 month 'lag'
• Sub-prime bonds - beware the lag will implode to zero and the liquidity will catch everyone off guard
• Unemployment is a lagging indicator!
• Employment Cost Index  (ECI)
• Real Estate (residential) - since this is not a liquid investment you better know what you have in terms of a plan for the property
• Corporate Profits - will start to decline/drop off

Leading indicators

• Credit Spreads, availability of credit - i.e. liquidity drying up.
• Durable Goods orders - decline / drop off
• Geo growth - US tended to lead globally, followed by EU, however, all the recent (past 30-years) regulations and bureaucracy has shifted global growth to to the East (I.E. Southeast Asian countries)
• Manufacturing Index (one has to ask how relevant this is in an advanced nation?)
• New housing starts / building permits will shed light into the dark recesses of the residential market
• PPI leads CPI in changes
• U6 (aka under employed) adds on those workers who are part-time purely for economic reasons. And have been found to actual lead Unemployment values by couple of 10-12 months

Technical Analysis (TA) Indicators

for all the chartologists out there

• Golden Cross - when the 50 & 200 moving data averages rapidly converge tends to be very bullish
• Death Cross - when the 50 & 200 moving data averages rapidly converge tends to be very bearish
• RSI - Relative Strength Index, tends to be one of the most used indicators even by those just getting into equity or crypto trading
• MACD - Moving Average Convergence Divergence indicator, besides being a mouthful its a wonder of sentiment tracking. 
• Resistance - when a pattern builds within a range and can't gain enough strength to break higher or lower (case dependent) . Top of the pattern
• Support - tends to be the bottom of a range where there are equal sellers and buyers allowing for pattern consolidation. Commonly known as consolidation level.

Common Sense indicators

• Seeing an increase in damaged vehicles on the road
• Reports of increased consumer credit card debt/thresholds
• You can get a really good idea how the U.S. economy is doing by watching restaurants in your area. 
• Also look how empty Mall / Shopping center parking lots are
• Wage Growth - are people earning and keeping more of their money?

Summary

I try to view each of the indicator areas as legs of a triangle to bring me balance, as all the media outlets are biased and thus I make my own decisions.

Disclaimer - I am NOT a financial advisor, nor is this financial advise, just pulling together information for your life knowledge.

Credits - image borrowed from corpfinanceinstitute.com, no ownership nor transference has been intended.