What characterizes a 'lagging indicator'?

A lagging indicator is characterized by its ability to reflect changes in the economy after those changes have already occurred. This means that it provides information based on past performance, which can be helpful for analyzing economic trends once they have already begun. For example, unemployment rates and corporate profits are common lagging indicators, as they change in response to shifts in the economy rather than predicting future movements.

In contrast, other types of economic indicators, such as leading indicators, aim to predict future economic performance and trends. Therefore, options that discuss predicting future outcomes or providing immediate analysis do not align with the definition of lagging indicators. Such indicators are valuable for confirming patterns after they have taken place, allowing economists and analysts to validate their observations regarding the economic landscape.