Saturday, November 20, 2010

USA Monthly Leading Economic Index Up in October (Chart) "Remains on upward trend, suggesting modest economic expansion"


USA Economy: "remains on upward trend, suggesting modest economic expansion"

USA Monthly Leading Economic Index Increases for 4th Consecutive Month

Official Statement The Conference Board Leading Economic Index® (LEI) for the U.S. increased 0.5 percent in October to 111.3 (2004=100), following a 0.5 percent increase in September, and a 0.1 percent increase in August. Says Ataman Ozyildirim, economist at The Conference Board: “The LEI remains on an upward trend, suggesting the modest economic expansion will continue in the near term. The LEI’s growth has been slowing this year, but gains in the financial components helped its pickup in October.” Says Ken Goldstein, economist at The Conference Board: “The economy is slow, but latest data on the U.S. LEI suggest that change may be around the corner. Expect modest holiday sales, driven by steep discounting. But following a post-holiday lull, the indicators are suggesting a mild pickup this spring.”

Cycle History The current LEI in October of 111.3 (preliminary) is at a cyclical high. The current LEI is up +13.4 and +13.7% from the cyclical bottom of 97.9 in March 2009.

Trend As noted by The Conference Board, the general trend is upwards. The October LEI of 111.3) (preliminary) is above the 12-month moving average of 109.1. The 12-month moving average has been increasing, ascending, each month in 2010. The October LEI is also above the 24-month moving average of 104.8, which is also increasing. (The 12-month and 24-month moving averages charts are not shown on this page). This is the 4th consecutive monthly increase and 17th in the last 19 months (since March 2009 cyclical bottom).

Monthly Leading Economic Index (Chart) Below is a chart of the latest 24 months (2 years) of The Conference Board LEI from November 2008 through the latest month reported, October 2010 (preliminary). As can be seen, the LEI bottomed in March 2009 and the Great Recession officially ended in June 2009. The LEI then began ascending to the current October 2010 peak.

Commentary The October LEI (preliminary) posted yet another gain to set another  cyclical high of 111.3 (preliminary), which is encouraging for the USA economy. The LEI has come a long way from the March 2009 cyclical low of 97.9. The LEI is still ascending which indicates a double-dip recession is not probable.

Link The Conference Board (TCB) *Data courtesy of The Conference Board*

About The Conference Board Leading Economic Index® (LEI) for the U.S.

The composite economic indexes are the key elements in an analytic system designed to signal peaks and troughs in the business cycle. The leading, coincident, and lagging economic indexes are essentially composite averages of several individual leading, coincident, or lagging indicators. They are constructed to summarize and reveal common turning point patterns in economic data in a clearer and more convincing manner than any individual component – primarily because they smooth out some of the volatility of individual components.

The ten components of The Conference Board Leading Economic Index® for the U.S. include:
Average weekly hours, manufacturing
Average weekly initial claims for unemployment insurance
Manufacturers’ new orders, consumer goods and materials
Index of supplier deliveries – vendor performance
Manufacturers' new orders, nondefense capital goods
Building permits, new private housing units
Stock prices, 500 common stocks
Money supply, M2
Interest rate spread, 10-year Treasury bonds less federal funds
Index of consumer expectations

About The Conference Board

and better serve society. The Conference Board is a non-advocacy, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States.
The Conference Board is a global, independent business membership and research association working in the public interest. Our mission is unique: To provide the world’s leading organizations with the practical knowledge they need to improve their performance

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