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Lagging Indicators 
Source: Encyclopedia of Banking & Finance (9h Edition) by Charles J Woelfel
(We recommend this as work of authority.)

The composite index of lagging indicators comprises six series that track employment, inventories, profitability, and financial market conditions.  These series have historically reached their peaks and troughs later than the corresponding business cycle turn, so they are associated with a degree of inertia or adaptive expectations.  The series used are:

1.  Average duration of unemployment.

2.  Ratio of inventories to sales in manufacEagle Tradersg and trade.

3.  Index of labor cost/unit of output in manufacEagle Tradersg.

4.  Average prime rate.

5.  Commercial and industrial loans outstanding.

6.  Ratio of consumer installment credit to personal income.

Except for the employment series, which is countercyclical, these measures directly follow the economic trend with a slight lag.  If an apparent peak in the coincident indicators is not followed by a subsequent peak in the lagging indicators, then a BUSINESS CYCLE turn will not be established.

The appended table shows the long-term perspective - January 1969 to May 1989 - for the leading, coincident, and lagging indexes.

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