Friday, December 17, 2010

USA Monthly Leading Economic Index Up 5th Consecutive Month! (Chart) *Expansion is gaining momentum & spreading*


The Conference Board: USA Monthly Leading Index

USA Monthly Leading Economic Index Up for 5th Consecutive Month!

Official Statement by The Conference Board The Conference Board Leading Economic Index® (LEI) for the U.S. increased 1.1 percent in November to 112.4 (2004=100), following a 0.4 percent increase in October, and a 0.6 percent increase in September. Says Ataman Ozyildirim, economist at The Conference Board: “November’s sharp increase in the LEI, the fifth consecutive gain, is an early sign that the expansion is gaining momentum and spreading. Nearly all components rose in November. Continuing strength in financial indicators is now joined by gains in manufacturing and consumer expectations, but housing remains weak.” Says Ken Goldstein, economist at The Conference Board: “The U.S. economy is showing some sparks of life in late 2010. Overall, the indicators point to a mild pickup after a slow winter. Looking further out, possible clouds on the medium term horizon include weaknesses in housing and employment.”
Cycle History The current LEI in November of 112.4 (preliminary) is at a post-Great Recession cyclical high. The current LEI is up +14.5 and +14.8% from the Great Recession cyclical bottom of 97.9 in March 2009.

Trend As noted by The Conference Board, the general trend is upwards. This is the 5th consecutive monthly increase and 18th in the last 20 months (since March 2009 Great Recession cyclical bottom). The November LEI of 112.4 (preliminary) is above the 12-month moving average of 109.7. The 12-month moving average has been increasing each month in 2010. The current LEI is also above the 24-month moving average of 105.3, which is also ascending. (The 12-month and 24-month moving averages charts are not shown on this page).

Monthly Leading Economic Index (Chart) Below is a chart of the latest 24 months (2 years) of The Conference Board LEI from December 2008 through the latest month reported, November 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 November 2010 post-Great Recession peak.

Commentary The November LEI (preliminary) posted yet another gain to set yet another post-Great Recession cyclical high of 112.4 (preliminary), which is very 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.

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

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 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.

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* Data courtesy of The Conference Board *

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