Coincident indicators tend to happen in real time and are monitored as such. They are like windows into the economy’s actual functioning at any given time but are difficult to use to predict any future activity or to review mistakes (or successes) of the past. GDP is a coincident indicator that is often used to gauge where countries stand compared to each other.
How are economic indicators chosen?
Economic indicators are generally chosen by economists to help solve particular problems in economics. For example, if they wanted to know how well the United States was doing in manufacturing compared to China, they could easily compare specific indicators that speak to that industry in both countries. They might look at indicators that delve into different kinds of manufacturing activity or the cost of manufacturing and the debt load of manufacturing businesses.
There are dozens of commonly used indicators, so there’s always some bit of information that’s exactly what’s needed to approach an economic problem. Much like the right equations in math solve specific problems, these indicators can help answer questions about economies.
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