What is a Lagging Indicator?

A lagging indicator is a metric or data point that reflects the outcomes or results of past actions. It typically shows how well something performed over a specific period but doesn't predict future performance. Common examples include sales revenue, profit margins, and unemployment rates.

Lagging indicators are important because they provide insights into the effectiveness of previous strategies or decisions. While lagging indicators help evaluate past performance, they are not useful for predicting future trends. Businesses often use them in combination with leading indicators, which provide predictive insights, to make well-informed decisions and improve future strategies.