Business cycle indicators
Identify whether each of the following is a leading, coincident, or lagging indicator for a business cycle.
Indicators
Leading
Coincident
Lagging
Personal income minus transfer payments =Coincident
Prime rate = leading
Money supply = leading
Consumer expectations = leading
Delayed deliveries= leading
Labor cost per unit of output = lagging
Increases in new consumer goods orders tend to indicate that consumer spending will rise in the near future. This, in turn, means higher real GDP and higher industrial production. Therefore, increases in new consumer goods orders tend to be followed by a rise in real GDP. In turn, a rise in real GDP tends to be accompanied by increases in industrial production. As the industrial production increases, businesses will need more workers, and they will increase the number of new hires. Therefore, a rise in real GDP tends to be followed by a decrease in unemployment