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January 1985, 
Vol. 67, No. 1
Posted 1985-01-01

A Descriptive Analysis of Economic Indicators

by Ronald A. Ratti

Ronald A. Ratti analyzes the indexes of leading, coincident and lagging indicators. The author describes the way in which these indexes are constructed and explains why they might provide useful information on future economic conditions. He finds the magnitude of successive revisions in estimates of the indexes examined to be quite substantial. Ratti then examines the forecasting performance of the index of leading indicators using both two and three months of consecutive movement in the index as a criteria for prediction. The author shows that the large magnitude of revisions in preliminary estimates of change in the leading indicator index complicates the interpretation of signals in the short run. The use of preliminary and final estimates of the leading indicator index are shown to give sometimes different predictions about the onset of recession.