NISM Certifications · NISM-Series-XV: Research Analyst · Economic Analysis
Which of the following is classified as a lagging economic indicator?
The unemployment rate is a lagging indicator because it changes only after the economy has already turned. Building permits, stock market levels and average manufacturing hours usually move ahead of the business cycle, so they are leading indicators.
- AIndex of new building permits issued
- BStock market index levels
- CUnemployment rateCorrect
- DAverage weekly manufacturing hours
Explanation
Lagging indicators change after the economy has already started to move. The unemployment rate typically peaks after a recession has begun and falls after recovery is under way. Building permits, stock indices and average hours worked tend to turn before the economy, so they are leading indicators.
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