How do lagging indicators differ from leading indicators?

The distinction between lagging and leading indicators is fundamental in business analytics and economic forecasting. Leading indicators are metrics that help to predict future performance or outcomes. They give insights into potential changes in the economy or a business's performance before these changes occur. For example, increases in new orders for goods may suggest future production increases, indicating economic growth before it happens.

Lagging indicators, on the other hand, are metrics that reflect outcomes after events have occurred. They provide data that confirm trends and patterns but do not offer insight into future outcomes. For instance, unemployment rates or revenues recorded at the end of a quarter are considered lagging indicators since they report what has already happened rather than forecast what is to come.

Therefore, the choice identifying that leading indicators suggest future performance accurately captures the essence of their characteristics, making it the correct answer.