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:
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.