Short-term economic forecasting: some leading indicators

Abstract

Trend projection is the most popular technique oj short-term forecasting, but the recent industrial recession has brought home to Government as well as business the dangers inherent in uncritical trend projections. Experience in advanced countries has shown that some sectors of the economy and certain economic time series move up or down ahead of others. Such leading indicators have to be identified, their approximate leads measured, and arrangements made for continued processing and use of such data. Among the potential leading indicators are construction permits, manufacturers' new orders, connected loads, goods traffic, Government tenders and inventories with manufacturers. The author feels that many standard indicators could be meaningfully identified and used only when the ^operation of the price mechanism becomes more effective.