What term refers to indicators that predict where the economy is headed?

Leading indicators are economic statistics or data points that tend to change before the economy as a whole changes, making them useful for predicting future economic activity. These indicators can signal trends in the economy ahead of time and provide valuable insights for policymakers, businesses, and economists attempting to forecast the direction of the economy.

For example, indicators such as building permits, stock market performance, and new business startups can give an early indication of economic expansion or contraction. By analyzing these indicators, stakeholders can make informed decisions based on anticipated economic conditions.

In contrast, lagging indicators track economic activity after it has occurred, offering a retrospective view of the economy, while coincident indicators move in tandem with the overall economy, providing a snapshot of current economic activity. Macroeconomic drivers refer more broadly to factors influencing the economy rather than specific indicators measuring its future trajectory. Thus, leading indicators uniquely fulfill the role of forecasting economic trends.