Leading and Coincident Indexes for The Financial Services Industry

The general leading indicator approach, commonly applied to the national economy, can also be used to analyze major sectors of the economy. Given the considerable importance of the financial services industry, also known as FIRE (Finance, Insurnace and Real Estate), a system of leading and coincident indexes for this industry in the United States has been developed. Five series have been identified as consistently providing advance warning of cyclical turning points in the financial services industry and are presented as leading indicators of the industry' growth rate chronology. The resulting Leading Index of Financial Services leads turning points in the financial services reference chronology.