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Finance Allah Shmoop what is a coincident indicator It's our

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coincident indicator Zahra Siri's of measures taken from different sectors

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or areas of a system that taken as a whole

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show What's currently going on in that system Like what's

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coincidence What's happening at the same time I think of

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them as displays on your fitbit that air telling you

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your heart rate respiration blood pressure and oxygen level right

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now like when you're ten minutes into your thirty minute

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run or painting So let's say that as you're walking

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into the living room from the kitchen you just realize

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your sock is suddenly wet and cold and that there's

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a strange smell that vaguely resembles cat food but could

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be something way worse And you see the cats linking

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behind the couch as if she did something wrong You

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know we're looking at you Todd These air all coincident

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indicators Riel Time up to the minute information from a

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variety of sources that point to an increased trend in

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the cat you know blowing chunks In the world of

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finance there are three different sets of indicators that economists

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look at to get different perspectives on the economy and

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to help understand the ebbs and flows of doe Lagging

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indicators are measures that on ly change after something has

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shifted in the economy There like the pain message our

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brain sends when we grab a hot pan We've already

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grabbed the pan and gotten the burn and our brain

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is now a second later Just letting us know it's

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not pleased Outside of the business world a batting average

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for a baseball player is an example of a lagging

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indicator as it can only be calculated after the player

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has completed an at bat But it may reveal a

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pattern in his overall performance at the plate that leads

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to future salary negotiations Right Well unemployment rates are commonly

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used Lagging indicator Typically unemployment rates shift after something like

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a multinational corporation undergoing massive downsizing profits or another after

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the fact type of measure often cited as a lagging

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indicator leading indicators or measures that we hope will predict

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an upcoming pattern or change in the economy Something like

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the Consumer Confidence index Yeah how about that Well the

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CC I measures how confident we consumers feel about buying

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stuff and the data can be used to help predict

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where and how our money might be spent but more

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simply the performance of the stock market One portion of

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the economy tends to lead or predict the performance of

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the economy Overall when the stock market swells the economy

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tends to follow that trend just a little later than

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the stock market swell And then we have coincident indicators

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like our fitbit on the current state of the economy

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Yeah or a live security feed showing us what's going

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on in the break room right this instant and we

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see you can't So what kinds of measures Air considered

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coincident indicators While the gross domestic product numbers or GDP

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is a big one the GDP is the sum of

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the value of all goods and services produced in a

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country over a set time period like quarterly or yearly

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or the big to Canada You know that huge country

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north of the U S Had a GDP of one

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point six five trillion dollars in two thousand seventeen and

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a GDP of one point five four trillion in two

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thousand sixteen As a snapshot of where Aki Canada is

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right now in terms of producing stuff and offering services

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we can see that their GDP went up a tad

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over And what is that About one hundred billion dollars

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in a year on a smaller scale Production figures by

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week month year etcetera for various industries like Steal tech

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agriculture and so on again how much are they producing

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right now Retail sales for the week month year even

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day Yet those tell us what's going on right now

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like Amazon tracks all that stuff to the hour So

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yeah coincident indicators All for sure There are scads of

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other coincident indicators like personal income data payroll data revenue

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data unemployment rates and average hours worked in different sectors

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And housing starts stuff like that Some agencies like Federal

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Reserve We'll pop a whole mess of coincident indicators together

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into an index to given even larger snapshot of what's

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happening right now around the world In the economy personal

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income data could be things like average income based on

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a family size or average income of workers in different

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industries like manufacturing are mining or services Payroll data could

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include a company publishing its total payroll for all its

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employees as a whole as well as its pay two

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different sectors like workers on the front lines middle management

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and upper tie wearing management Knowing how much companies are

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paying their workers lets us peek at how many people

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are making a living or non living wage Well unemployment

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race which are also considered lagging indicators can offer a

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real time assessment of how many people are actually working

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right now compared to some other time right So if

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the unemployment rate is something insane like twenty two percent

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like hello Spain Portugal we're looking at you We know

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there's a massive problem with the economy right now in

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addition to knowing that something must have happened in the

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past to lead to such a bad crisis Well think

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of this Is your fitbit also displaying a real time

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caloric intake vitamin level body temp hunger level and thirst

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level in addition to all the stuff it already does

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Yeah well there's also that composite index of coincident indicators

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published by the Conference Board The number of employees on

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nonagricultural Hey rolls measures well the number of employees not

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working in agriculture manufacturing service and so on Basically it's

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how many people are employed making stuff and helping people

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but not growing stuff Index of industrial production measures Well

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you guessed it Stuff produced in manufacturing mining and utilities

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and yes level of sales in manufacturing in trade is

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the total sales of stuff that gets sold crazy right

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Right Zip it ken And aggregate personal income is the

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total amount of money people make Taken together these four

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coincident indicators provide a pretty comprehensive snapshot of where the

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economy is at any given moment Well the big takeaway

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is that the data are supposed to be real time

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right now this very minute day week month or year

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They're supposed to tell us what's happening right now They're

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coincident Coincident indicators are nothing more than a fitbit for

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the economy to tell us when the heart rate is

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too high or too low Or uh you know when

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Ken tries to sneak out early on a Friday Oh

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