Coincident indicator definition
/What is a Coincident Indicator?
A coincident indicator reflects the current state of the economy, because it has a history of moving in tandem with the economy. These types of indicators are useful for providing a current view of economic conditions.
Using coincident indicators in concert in the form of an index is more useful than any indicators individually, since individual indicators may occasionally be inaccurate. These inaccuracies may be triggered by such issues as seasonal quirks or unusual weather conditions, such as an ice storm that halts economic activity over a large part of the country.
Since coincident indicators only confirm current conditions, they tend to be ignored. Nonetheless, they can strongly support the existence of a trend in the business cycle, either up or down.
Examples of Coincident Indicators
The coincident indicators more commonly used to compile indices of the economy’s condition are as follows:
Number of employees on non-agricultural payrolls (representing employment)
Personal income minus transfer payments (representing income)
Industrial production index (representing production)
Manufacturing and trade sales (representing sales)
Coincident Indicators vs. Leading and Lagging Indicators
A coincident indicator confirms the current state of the economy, while a leading indicator predicts the economy’s future state, and a lagging indicator confirms a change in the economy after it has already occurred.