But one could arguably view unemployment as a leading indicator, if a rather perverse one. If you look at the relationship between the unemployment rate and the 10 most recent recessions in the U.S., it’s striking how quickly recessions follow in the wake of the economy hitting full employment.
For economists, the unemployment rate has always been a lagging indicator: It’s like looking in the rear-view mirror. It tells us where the economy was in the not-too-distant past.