What is a Lagging Indicator?

A lagging indicator is a financial gauge that becomes measurable only after an economic shift has taken place.

How Does a Lagging Indicator Work?

There are certain economic indicators that rely on changes in productivity or economic growth. For this reason, lagging indicators do not lend themselves to forecasting. Examples of lagging indicators include company earnings and levels of unemployment.

Why Does a Lagging Indicator Matter?

Analysts and economic policymakers measure lagging indicators to confirm or refute previous analyses and the effectiveness of policy directives.

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Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.

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