Lead and Lag

1. Leading and Lagging Indicators

2. Leading Indicators
• Definition: An indicator that predicts future
events and tend to change ahead of that event.
Sometimes used as a predictor.
• The Federal government watches unemployment rate,
money supply, production, etc. (all leading indicators), to
decide what to do about the interest rates.
• There is a link between the rate of hand washing (leading)
and infections (lagging).
• VCH monitors children with lesions, spider bites, cellulitis in
children since these often predict MRSA.
• Leading health indicators are: physical activity, weight,
tobacco use, substance abuse, mental health,
immunizations, etc. These tell us the health of our nation.

3. Lagging Indicators
• Definition: An indicator that follows an event.
• Previous example of infections (lagging) caused by hand
washing rate (leading).
• Unemployment rate (lagging) indicates that the economy
has been doing poorly.
• Patients with ventilator acquired pneumonia signifies that
we may not have done followed the necessary precautions
for the patients.
• Financial statements are lagging indicators. The show the
result of spending.