In my Master’s degree program, we spent a lot of time determining various market indicators; some are leading (or predictive), and some are lagging (a confirmation of what just happened). A leading indicator is challenging to develop and track, but it gives your business/economy time to correct your action plan.

As a leading indicator,

the reduction of temporary employees has successfully predicted previous economic downturns, including the recessions of 2001 and 2007.

But, there have also been a few false signals using this measurement.

Economists review a few leading indicators to test the premise that the economy is entering a recession. A few that I have recently observed are:

• Multiple companies announcing significant layoffs of employees

• The job gain in December was the smallest in two years.

• Business executives are pessimistic about this year.

• Manufacturing overtime hours are dropping.

Can you add some more leading indicators predicting a recession? Can you also refute the lower temp hiring? Some have said that the temps may be only losses from the large companies and do not reflect an industry-wide move. Let the debate continue…

Wall Street Journal, 012252023, Page A2, Sarah Chaney Cambon