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Eric Basmajian observes that GDP and the unemployment rate are lagging indicators by design.
He explains that both a recession and subsequent recovery are officially dated using these metrics, which leads to downturns feeling unexpected and periods of growth feeling as if opportunities have already passed. According to Basmajian, these indicators capture the economic climate as it exists today, rather than forecast future changes.
Earlier this cycle, Basmajian reviewed shifts in Leading Economic Indicators and examined their performance in relation to recent trends in the economy, according to his cycle review. He also noted that current conditions have lagged behind historical norms, stating that the economy was stronger than today’s levels 80 percent of the time in a separate analysis. These observations provide context for his views on present-day economic metrics.