What term refers to indicators that forecast future economic activity?

Leading economic indicators are metrics that are used to predict future economic activity. These indicators typically change before the economy begins to follow a particular pattern or trend, which makes them useful for forecasting whether the economy is likely to expand or contract. For instance, leading indicators can include metrics such as new housing permits, stock market performance, and consumer confidence indexes.

These indicators provide insight into where the economy may be headed, allowing businesses, investors, and policymakers to make informed decisions based on anticipated changes in economic conditions. In contrast, prime rate, liquidity, and securities relate to specific aspects of financial markets and banking rather than serving as predictive tools for overall economic performance. For example, the prime rate reflects the interest rate banks charge their best customers and does not predict future economic conditions on its own. Liquidity refers to the ease of converting assets into cash, and securities are financial instruments that represent ownership or debt, neither of which directly serve the purpose of forecasting future trends in economic activity.