The Leading Indicators: A Short History of the Numbers That Rule Our World

How did we come by the “leading indicators” we place such stock in? We allocate trillions of dollars and make public policy and personal decisions based upon them, but what do they really tell us?

We are bombarded every day with numbers that tell us how we are doing, whether the economy is growing or shrinking, whether the future looks bright or dim. Gross national product, balance of trade, unemployment, inflation, and consumer confidence guide our actions, yet few of us know where these numbers come from, what they mean, or why they rule our world.

In The Leading Indicators, Zachary Karabell tells the fascinating history of these indicators. They were invented in the mid-twentieth century to address the urgent challenges of the Great Depression, World War II, and the Cold War. They were rough measures— designed to give clarity in a data-parched world that was made up of centralized, industrial nations—yet we still rely on them today.

We live in a world shaped by information technology and the borderless flow of capital and goods. When we follow a 1950s road map for a twenty-first-century world, we shouldn’t be surprised if we get lost.

What is urgently needed, Karabell makes clear, is not that we invent a new set of numbers but that we tap into the thriving data revolution, which offers unparalleled access to the information we need. Companies should not base their business plans on GDP projections; individuals should not decide whether to buy a home or get a degree based on the national unemployment rate. If you want to buy a home, look for a job, start a company, or run a business, you should find your own indicators. National housing figures don’t matter; local ones do. You can find them at the click of a button. Personal, made-to-order indicators will meet our needs today, and the revolution is well underway. We need only to join it.

"Our understanding of the economy is shaped by the numbers we use to measure it. In this engaging and subversive history, Zachary Karabell tells the story of how the indicators came to rule us, who invented them, what they actually tell us, and why we need to rethink all of them if we are to make sense of the world today."--Justin Fox, Executive Editor, Harvard Business Review

"We live in a world of Big Data, and we are led to believe that it contains the truth of our lives. But the numbers that we use to tally our wealth, our productivity, and our very worth as human beings are based not on any absolute truth, but on the shifting sands of politics, culture, and the personal quirks of our leaders. Zachary Karabell is a thinker who understands why economics isn't a hard science. The Leading Indicators is a much needed book about economic numbers that tells us how much--and how little--they ultimately mean."--Rana Foroohar, Assistant Managing Editor, Time Magazine; Global Economic Analyst, CNN

"An enchanting primer on the origins and foibles of our economic numbers, marked with biting critique--and building toward the case for something new, different and adapted to the digital age."--James K. Galbraith, Professor, UT-Austin, and author of Inequality and Instability

"An amusing and eye-opening romp through the history of the powerful numbers, such as the unemployment and inflation rates, that influence the course of national policy. They're not only out of date, they often point us in the wrong direction. Karabell's surprising book shows that we don't know what we think we know, and trillions of dollars hang in the balance."--Jane Bryant Quinn, author of Making the Most of Your Money NOW

Our understanding of the economy is shaped by the numbers we use to measure it. In this engaging and subversive history, Zachary Karabell tells the story of how the indicators came to rule us, who invented them, what they actually tell us, and why we need to rethink all of them if we are to make sense of the world today. --Justin Fox, Executive Editor, Harvard Business Review"

We live in a world of Big Data, and we are led to believe that it contains the truth of our lives. But the numbers that we use to tally our wealth, our productivity, and our very worth as human beings are based not on any absolute truth, but on the shifting sands of politics, culture, and the personal quirks of our leaders. Zachary Karabell is a thinker who understands why economics isn't a hard science. The Leading Indicators is a much needed book about economic numbers that tells us how much and how little they ultimately mean. --Rana Foroohar, Assistant Managing Editor, Time Magazine; Global Economic Analyst, CNN"

An enchanting primer on the origins and foibles of our economic numbers, marked with biting critique and building toward the case for something new, different and adapted to the digital age. --James K. Galbraith, Professor, UT-Austin, and author of Inequality and Instability"

An amusing and eye-opening romp through the history of the powerful numbers, such as the unemployment and inflation rates, that influence the course of national policy. They re not only out of date, they often point us in the wrong direction. Karabell s surprising book shows that we don t know what we think we know, and trillions of dollars hang in the balance. --Jane Bryant Quinn, author of Making the Most of Your Money NOW"

To any who treat the government s economic data as if it were Holy Writ, Zachary Karabell s book will come as a revelation. The Leading Indicators is the fast-paced story of the statistics that occupy far too large a part of our national consciousness. If you always suspected that the GDP was a snare and the CPI a delusion, Karabell s narrative will tell you just how right you were. --James Grant, Editor, Grant s Interest Rate Observer"

"[The Leading Indicators] demystifies a lot of current debates, explains its subject matter clearly and shows that the major published macroeconomic statistics are neither nonsense nor conspiracy. Most people could read this book with enjoyment and profit."--Tyler Cowen "The Washington Post "