Legal Definitions - leading indicator

Definition: A leading indicator is a measurable factor that can be used to predict future economic or financial trends. It is an indicator that changes before the economy starts to follow a particular pattern or trend.

Example: One example of a leading indicator is the stock market. The stock market is often considered a leading indicator because it can predict the future direction of the economy. If the stock market is doing well, it is likely that the economy will also do well in the future. On the other hand, if the stock market is doing poorly, it is likely that the economy will also do poorly in the future.

Another example of a leading indicator is the number of building permits issued. If there is an increase in the number of building permits issued, it is likely that there will be an increase in construction activity in the future. This can be an indicator of economic growth.

These examples illustrate how leading indicators can be used to predict future economic or financial trends. By analyzing these indicators, economists and investors can make informed decisions about the future direction of the economy.