Why is inventories a lagging indicator when analyzing the macroeconomy?

Generally, it takes time to produce a finished product.

For example, when you build a house, the house starts to sell, the economy starts to recession, and many houses are only half built.

By the time they built it, it all turned into bad inventory, and the economy had been in recession for some time.

The inventory has increased.

It also takes time to distribute everyday goods. Consumers don't buy if they don't have money, and the production enterprises don't stop immediately, what should they do with the raw materials they enter? It's going to expire and break it. It's better to produce it and sell it cheaply. Everyone is like this, and the total social stock increases.

When all these inventories are consumed, a new wave of investment and production will be set off, and a new economic cycle will begin.

Theoretically, the average economic cycle lasts two years.

Therefore, how to shorten the time required from production to consumption is an important bottleneck in economic development and must be solved.

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Another point is that when the economy is just beginning to decline, inventory can be disposed of by means of price reduction.

After declining for a period of time, the company will lose money if it lowers the price, and it will not sell. It will become bad stock.

Let's take **as an analogy**, after a long-term bear market, when it just started to get better, there were not many people**; In the process of slowly going up, there are more and more people; And when the peak begins, the number of people reaches the peak.

This is consistent with "inventory", where sales orders grow at the same time, and in order to meet the needs of customers as quickly as possible and stand out from the competition, inventory increases faster than sales orders.

As for why it lags, it's because of **.

Still analyzing from the perspective of the long-term bear market, it is due to the initial consolidation, it is impossible to determine whether it is a fluctuation or the beginning of a trend, and when the trend starts, it has slowed down.

1.The leading indicators mainly include--- new loans from financial institutions, enterprise order index, land purchase area and development area of the real estate industry. Generation.

2.The main economic synchronization indicators are --- gross domestic product, gross industrial output value, total retail sales of consumer goods, and investment in fixed assets of the whole society.

3.The lagging indicators generally include --- fiscal revenue, total profits and taxes realized by industrial enterprises, and per capita disposable income of urban residents. The per capita annual net income of farmers.

Among the technical indicators we have used, it can be said that there are no leading and coincident indicators, they are all lagging behind, because the prophet does not exist. An indicator is a trend that we rely on to determine future trends. Let's say:

When a car passes by on the road, we look at the ruts to judge the direction of the car. Don't expect to rely on technical indicators to catch the shadow of the so-called main force, but you can rely on the trend to judge the direction of the **, because every change is not a day or two can be converted, as long as there is no greed, you can leave the market safely before the stock price dives in advance, this is the so-called leading indicator To put it bluntly, it is a kind of advanced judgment.

The leading indicator contains a future function, and the coincident indicator basically refers to the current price.

Lag, basically all indicators are lagging, only ** with time is the most realistic

The leading indicator is able to gain insight into the stock price through technical analysis, while the detailed planning of the future coincident indicator is now.

After that the indicator is in the past.

And because it is relative, there is no past, present and future.

Leading indicator (USA): 1The average number of hours worked per week by manufacturing production workers or non-managers.

2.The average number of people who apply for unemployment insurance for the first time each week. 3.

New orders for consumer goods and raw materials. 4.Percentage of sellers delaying deliveries to the company.

5.The number of private dwellings approved by local authorities (rather than actually breaking ground) for construction. 6.

Changes in sensitive materials**. 7.Index.

8.The amount of currency ** (refers to the amount of currency ** of m2) 9Changes in outstanding credit facilities for businesses and consumers.

Synchronous indicators: gross industrial output value, gross industrial output value of the whole people, sales revenue of industrial enterprises within the budget, retail sales of social commodities, net purchases of domestic commodities, net sales of domestic commodities, customs imports, and currency circulation. Lagging indicators:

The different indicators of national fixed asset investment, commercial loans, fiscal revenue and expenditure, total retail price index, consumer goods ** index, and bazaar ** index are only used as references, and individual indicators can only be inferred, and must be verified by specific macroeconomic fluctuations and a series of subsequent indicators in order to draw correct conclusions.

The cycle of inflation is relatively long, and money circulates in the market for a long time before it can be transmitted to various consumer industries.

When high inflation occurs, credit growth is reduced below nominal GDP growth, which means tightening. During a period of tightening, patience is necessary in order to bring inflation down. Because once inflation occurs, it is unlikely to come down quickly.

The policy objective should be to first limit inflation expectations through a credit crunch and then guide inflation down gradually over the next three years.

Lagging indicators:

Lagging indicators, indicators that do not show their effect until after economic fluctuations have occurred, a confirmation of the peaks and valleys that have occurred in the overall economic operation, can verify the signals displayed by leading indicators.

Gross Domestic Product (GDP) refers to the final result of the production activities of all resident units of a country (or region) in a certain period of time calculated by the market**, and is often recognized as the best indicator of a country's economic situation.

CPI is the abbreviation of Consumer Price Index. Household Consumption** Index, a macroeconomic indicator that reflects the change in the level of consumer goods and services** purchased by households.

It measures the relative number of changes in the level of a group of representative consumer goods and services over time in a specific period of time, and is used to reflect the change in the level of consumer goods and services purchased by households, and is the coefficient of change in the retail price of goods and services in a month.

Lagging indicators:

GDP is the abbreviation of Gross Domestic Product, which is the gross domestic product. It is a measure of the total amount of final products produced by all resident units of a country's (region) economy during the accounting period, and is often regarded as an important indicator of the economic status of a country (region). The new value added in the production process includes the value newly created by workers and the wear and tear value of fixed assets, but does not include the value as an intermediate input in the production process; In terms of physical composition, it is the final product produced in the current period, including the products used for consumption, accumulation and net export, but excluding the various intermediate goods that are consumed by other sectors.

There are three ways to calculate GDP: production method: GDP Total output of each industrial sector Intermediate consumption of each industrial sector:

Income Method: GDP Remuneration of Workers by Industrial Sector Depreciation of Fixed Assets by Industrial Sector Net Production Tax by Industrial Sector Operating Profit by Industrial Sector; Expenditure Method: GDP, Total Consumption, Total Investment, Net Exports.

The Consumer Price Index (CPI) is an index of price changes that reflects the statistics of products and services related to residents' lives, and is usually used as an important indicator to observe the inflation level.

If the CPI rises too much, indicating that inflation has become an economic destabilizing factor, the central bank risks tightening monetary and fiscal policies, creating uncertainty about the economic outlook. As a result, the index's excessively high rise is often unpopular with the market. For example, in the last 12 months, the consumer price index has risen, which means that the cost of living has risen on average compared to 12 months ago.

When the cost of living increases, the value of your money goes down. In other words, a $100 note received a year ago can only be used to buy goods and services worth $100 today.