Leading indicators: what turns before the economy does
Building permits, business orders, jobless claims, credit spreads and sentiment tend to move ahead of the wider economy. What each one signals and how reliable they are.
Most economic statistics describe what has already happened. Leading indicators are the ones that have historically tended to change direction before the wider economy does, because they capture decisions made today that play out over the following months.
The usual suspects
- Building permits. Builders apply for permits before they break ground, so permits lead construction activity and spending on furnishing new homes. Latest: 1,400 thousands of units annualized for September 2026.
- Core capital goods orders. Orders for business equipment, excluding aircraft and defence, show companies' investment plans before the spending happens. Latest: 87,640 millions of dollars for August 2026.
- Initial jobless claims. Layoffs show up in weekly claims well before they show up in the monthly unemployment rate. Latest: 199,000 persons for October 10, 2026. See what jobless claims tell you.
- Credit spreads. The extra yield investors demand to lend to riskier companies widens when lenders grow worried, which often precedes a slowdown. The high-yield spread is now not available here.
- The yield curve. An inverted curve has preceded every US recession since the late 1960s. See how to read the yield curve.
- Consumer sentiment. How households feel about their finances and the economy can foreshadow changes in spending, though it is volatile and often moves with petrol prices and the news. Latest: not available here.
Composite indexes
Because each of these is noisy, they are often combined. The Chicago Fed National Activity Index blends 85 monthly indicators into a single number centred on zero; when its three-month average falls below -0.70, that has historically signalled that a recession has likely begun. The site's recession watch uses that threshold as one of its six rules.
How reliable are they?
Leading indicators give useful early warnings but also false alarms. Any one of them can be thrown off by a strike, a hurricane, a change in regulations or a shift in how people answer surveys. They work best when several point the same way at once, and when the move is large and lasts more than a month or two.
On this site
The leading indicators pillar brings these signals together, and the business and housing pillars show the activity they tend to lead. For how they feed into the overall reading, see how the health score works.