Please explain the marked portion in the picture.(both the photos contain the disadvantages of leading indicator based approach)
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The composite leading indicator methodology has a drawback known as “look ahead” bias, where the entire history may be revised each month. This means that the most recently published historical indicator series may appear to have fit past business cycles better than it actually did in real time, making the LEI less reliable in predicting the current/next cycle than history suggests.
To address this, a new methodology called nowcasting emerged after the global financial crisis, with the objective of forecasting GDP for the current quarter based on data as it is released throughout the quarter. However, nowcasting also has weaknesses, including being complex and time-consuming to formulate, having data inputs that are not easy to forecast, relationships that are not static and may be mis-specified, potentially giving a false sense of precision, rarely forecasting turning points well, and being overfitted in-sample and likely overstating forecast accuracy. Additionally, “current” data may not be reliable as input for historical analysis.