The index measures business activity, which may be correlated with periods of expansion and contraction in the economy.
[4] While other economic nowcasting often estimates GDP or inflation,[5][6] the ADS index exists as a stand-alone series.
This is in part due to the business cycle not tied to a single variable, such as GDP, employment, or industrial production.
[7] Instead, business cycle theory suggests an underlying factor that moves each of these series.
[1] While it may have limited use in high-frequency finance, it serves a purpose in aiding monetary and fiscal policy by providing a quantitative measure of the current state of the economy.