Friday, October 21, 2011

USA Monthly Leading Economic Index at Post-Recession High! (Chart) "Soft economic conditions through end of 2011"


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The Conference Board: USA Monthly Leading Index

Official Statement by The Conference Board The Conference Board Leading Economic Index (LEI) for the U.S. increased 0.2 percent in September to 116.4 (2004 = 100), following a 0.3 percent increase in August, and a 0.6 percent increase in July.

Commenting on the USA LEI Says Ataman Ozyildirim, economist at The Conference Board: “September data shows moderating growth in both the LEI and the CEI. The weaknesses among the leading indicator components have become slightly more widespread in September. Moreover, the CEI suggests current economic conditions have been slow, with weak gains in all four components over the past six months. The slow pace in the LEI suggests a growing chance that this sluggish economy is going to be here for a while.” Says Ken Goldstein, economist at The Conference Board: “The LEI is pointing to soft economic conditions through the end of 2011. There is a risk that already low confidence – consumer, business and investor – could weaken further, putting downward pressure on demand and tipping the economy into recession. The probability of a downturn starting over the next few months remains at about 50 percent.”

Trend The short-term trend continues upwards, the LEI has increased for 5 consecutive months. The intermediate-term trend (6-month moving average) has continued upwards since April 2009, for 29 consecutive months. The long-term trend (12-month moving average) trends also continues upwards and has since 2009. The August 2011 increase is the 28th increase in the past 30 months (since the March 2009 Great Recession cyclical low of 97.9).

Cycle History The Leading Economic Index for September 2011 (preliminary) is at a Post-Great Recession cyclical high of 116.4, which exceeds the previous high in August 2011 of 116.2 (revised). The Great Recession cyclical low was 97.9 in March 2009.

Monthly Leading Economic Index (Chart) Below is a chart of the The Conference Board LEI, including the March 2009 Great Recession cyclical low of 97.9 through the latest month reported.


Commentary The September 2011 Leading Economic Index (preliminary) is encouraging, grinds higher, and a Post-Great Recession cyclical high of 116.4. "Positive contributions from the yield spread, real money supply and index of supplier deliveries offset the large negative contribution from building permits." The USA Monthly LEI has come a long way from the March 2009 cyclical low of 97.9 (see chart above).

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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