The History of Economic Indicators: How the Business Cycle Got Its Dashboard

1913-1920: Mitchell and the Empirical Turn

Wesley Clair Mitchell published Business Cycles in 1913, arguing that recurring booms and slumps were a systematic feature of commercial economies that should be studied through data rather than deduced from first principles. In 1920 he helped found the National Bureau of Economic Research and became its first director of research, giving that empirical program an institutional home. The early NBER approach was deliberately atheoretical: assemble hundreds of economic time series, identify when each one turns, and look for regularities in the order in which they do so. That painstaking cataloguing is the origin of the entire leading-coincident-lagging framework, and it is why the classification is fundamentally an empirical observation rather than a theoretical claim.

1937-1938: A Treasury Request Produces the First List

The sharp recession that began in 1937 created an urgent practical question: how would policymakers know when recovery had started? Treasury Secretary Henry Morgenthau turned to the NBER, and Mitchell and his younger colleague Arthur F. Burns responded in 1938 with a study of statistical indicators of cyclical revivals — a screened list of series that had historically turned upward before general business activity did. This was the first systematic attempt to identify leading indicators for real-time use rather than for historical description. The screening criteria they applied are still recognizable: economic significance, statistical adequacy, timing consistency across cycles, conformity to the cycle, smoothness, and prompt availability.

1946: Measuring Business Cycles

Burns and Mitchell published Measuring Business Cycles in 1946, setting out the NBER methodology in full. Their definition of a business cycle — expansions occurring at about the same time in many economic activities, followed by similarly general recessions, with the sequence recurrent but not periodic — is the ancestor of the definition the NBER still uses, and it explains why recession dating attends to how widely a decline is spread across the economy rather than just how deep it is. The book drew a famous critique from Tjalling Koopmans, who called the approach measurement without theory; the resulting debate about the proper relationship between data and theory shaped econometrics for a generation.

The 1960s: Geoffrey Moore and a Government Publication

Geoffrey H. Moore, an NBER researcher who later served as Commissioner of Labor Statistics, took the indicator lists and turned them into composite indexes — weighted combinations of several series, which are far less erratic than any single component. Moore is generally credited as the architect of the modern leading index. From 1961 the Commerce Department published the indicators in a monthly report titled Business Cycle Developments, renamed Business Conditions Digest in 1972, which made the leading, coincident, and lagging composites a routine part of economic commentary. Moore later founded the Center for International Business Cycle Research, extending the method to other countries.

1978 and 1995: The Dating Committee and the Move to the Private Sector

Two institutional changes complete the story. In 1978 the NBER formally established its Business Cycle Dating Committee, giving the job of declaring peaks and troughs to a standing group of academic economists — which is why, uniquely among major economies, U.S. recessions are dated by a private research organization rather than a government agency. Then in December 1995 the Commerce Department transferred the composite indexes to The Conference Board, a private business research group, which has published the Leading Economic Index, the Coincident Economic Index, and the Lagging Economic Index ever since, periodically revising the component lists as data sources and the structure of the economy change.