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Forecasting Turning Points With Leading Indicators

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The financial news media frequently point to the movement of the Composite Index of Leading Indicators (ILl) as proof of impending growth or contraction in economic activity. A closer look indicates, however, that while the ILl can provide a great deal of useful information, its value as a forecasting tool is limited. Its usefulness increases when it is used in cornbination with other indexes.

The financial news media frequently point to the movement of the Composite Index of Leading Indicators (ILl) as proof of impending growth or contraction in economic activity. A closer look indicates, however, that while the ILl can provide a great deal of useful information, its value as a forecasting tool is limited. Its usefulness increases when it is used in cornbination with other indexes.


Suggested citation: Anderson, Gerald H., and John J. Erceg, 1989. "Forecasting Turning Points With Leading Indicators," Federal Reserve Bank of Cleveland, Economic Commentary, 10.01.1989.

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