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Friday, March 29, 2024

Conference Board Leading Economic Index: ‘Slow But Continued Expansion’

Courtesy of Doug Short.

The Conference Board Leading Economic Index (LEI) for January was released this morning. The index increased 0.2 to 94.1 (2004 = 100), following 0.5 in December, and a no change in November. The Briefing.com consensus had forecast a 0.3 increase. Today’s press release highlights the sound, if sluggish, growth in the economy.

Here is the overview of today’s release from the LEI technical notes:


The Conference Board LEI for the U.S. increased again in January. Positive contributions from the financial indicators, initial claims for unemployment insurance (inverted) and building permits offset the negative contributions from consumer expectations for business conditions and the average workweek in manufacturing. In the six-month period ending January 2013, the leading economic index increased by 1.1 percent (about a 2.2 percent annual rate), up slightly from 1.0 percent (about a 2.0 percent annual rate) during the previous six months. In addition, the strengths among the leading indicators have remained widespread.
[Full notes in PDF format]

Here is a chart of the LEI series with documented recessions as identified by the NBER.

And here is a closer look at this indicator since 2000. We can more readily see that the recovery from the 2000 trough has been quite week in 2012.

For a more details on the latest data, here is an excerpt from the press release:

Says Ataman Ozyildirim, economist at The Conference Board: “The U.S. LEI rose again in January, pointing to a slow but continued expansion in economic activity in the near term. Despite continued weakness in manufacturers’ new orders and consumer expectations, improvements in housing permits and financial components helped boost the LEI in January. Meanwhile, the CEI also advanced in January, despite the slight decline in industrial production. Both the LEI and CEI have experienced widespread gains among their components over the past six months.” Says Ken Goldstein, economist at The Conference Board: “The indicators point to an underlying economy that remains relatively sound but sluggish. Credit use has picked up, driven in part by relatively strong demand for auto loans. The biggest positive factor is housing. The housing market is now at twice the level reached during its recessionary lows, and will likely continue to improve through the spring, delivering some growth momentum to the labor market and the overall economy. The biggest risk, however, is the adverse impact of cuts in federal spending.”

For a better understanding of the relationship between the LEI and recessions, the next chart shows the percentage off the previous peak for the index and the number of months between the previous peak and official recessions.

Here is a look at the rate of change, which gives a closer look at behavior of the index in relation to recessions.

And finally, here is the same snapshot, zoomed in to the data since 2000.

Check back next month for an updated analysis.

 

 

 

 

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