Lagging Indicator - Definition

They are used to analyze economic behaviour and predict how the economy will act in the near future. Lagging indicators are indicators that usually change after the economy as a whole does. An example of a closely monitored lagging indicator is the Unemployment Rate of a country. As the economy weakens, the unemployment rate increases correspondingly. The Index of Lagging Indicators is published monthly by The Conference Board, a non-governmental organization, which determines the value of the index from seven economic variables. These components tend to follow changes in the overall economy.

In Technical Analysis, Bollinger Bands are one of various lagging indicators used. In a performance measuring system, profit earned by a business is a lagging indicator as it reflects a historical performance; similarly, improved customer satisfaction is the result of initiatives taken in the past.

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