Tuesday, November 30, 2010

USA & Global Economy: Overall Positive News in November (Review, Charts) *Monthly Economic Review*

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USA & Global Economy: Manufacturing and Services Sectors Continue Expanding after Summer Slump


USA & Global Economy: Overall Positive News in November
* Monthly Economic Review *

Although the EU Sovereign Debt Crisis continues, both the USA and Global Economy showed renewed economic recovery after the Summer Slump. Of course, all is not well: the USA financial system continues with problems and weakness, including a foreclosure fiasco and crisis, the USA unemployment remains high, and USA real estate is in a market depression. The aftermath of the Credit Bubble and Great Recession will linger indefinitely. However, the USA GDP is growing faster than projected and the risk of a double dip recession now appears much diminished.

Below are November post headlines from both Boom Doom Economy and Financial Controls summarizing select economic data and news, in reverse chronological order. Further below is the historical and projected USA GDP per the U.S. Bureau of Economic Analysis. Also further below is the projected GDPs for the USA, Japan, the Euro Area, and Total OECD per the latest OECD economic outlook. Beginning December 1, 2010, the economic data for November will begin and should indicate continuing economic recovery and expansion. Q4 2010 should be a better than initially projected quarter for the USA and Global Economy. Whether the pace of the economic recovery will continue on to Q1 2011 or will slow is the concern now.

USA Positive Economic Data and News
USA Monthly Consumer Confidence Index at 5-Month High (Chart) "Suggests the economy is still expanding, albeit slowly"
USA Economic Weekly Leading Index at 27-Week High (Charts) *WLI continues uptrend*
USA Weekly Unemployment Claims Lowest Since July 2008! (Charts) *Bonus Chart: The Great Recession*
USA Q3 GDP Revised Upwards to +2.5% (Charts) "Sharp deceleration in imports"
USA Monthly Leading Economic Index Up in October (Chart) "Remains on upward trend, suggesting modest economic expansion"
USA Consumer Sentiment at 5-Month High (Chart) "Spending will continue close to current rate"
USA October Sales for Retail & Food Services at 26-Month High (Chart) *Up +1.2% to $373B*
USA Non-Manufacturing Index (NMI) Up +1.1% in October (Chart) *Continued growth for 10 consecutive months*
USA Manufacturing PMI Increases in October, at 5-Month High (Chart) *Signals continuation of economic recovery*

USA Neutral and/or Negative Economic Data and News
USA Problem Bank List Increases to 860 (Charts) *FDIC Quarterly Banking Profile*
Federal Reserve Lowers USA 2010 & 2011 GDP Projections (Charts) *Higher unemployment rate projections*
USA Industrial Production Index Unchanged in October (Charts) *Manufacturing up, utilities down*
USA Total Consumer Credit Increases in September (Charts) *Revolving credit down 25th consecutive month*
Bank Failure Friday: FDIC Closes 4 Banks *2010 total now 143, exceeds 2009 total of 140*
Federal Reserve: Pace of USA Economic Recovery Continues to Be Slow (Review, Chart) *Will purchase $600B US Treasury securities*
USA Unemployment Rate Continues at 9.6% in October (Charts, Review) *New jobs +151K, first increase since May*
USA Economy: No Double Dip Recession, No Rapid Recovery (Videos) *Lakshman Achuthan of ECRI*
How The Foreclosure Crisis Began (Video) *A small house in Maine, a volunteer attorney*

Global Economic Data and News
IMF World Economic Outlook (Video, Charts) "Recovery proceeding broadly as expected"
OECD: Economic Recovery Underway, Slower Than Expected (Video, Charts) *Challenge is self-sustained growth*
Global All-Industry Output Index at 6-Month High (Chart) *Accelerates in October*
Global Services PMI Up a Strong +2.3% in October (Chart) *First acceleration in 6 months*
Global Manufacturing PMI Up +1.2% (Chart) *First acceleration in 6 months*
Euro Zone Manufacturing Increases in October (Video) *First expansion in 3 months*
China & UK Manufacturing Expands in October (Videos) *Strong start for Q4*


USA GDP by Quarter

USA GDP by Quarter (Chart) The chart below is the annualized percentage change of the GDP (seasonally adjusted at annual rate) from the preceding quarter, the most common GDP measure. As can be seen, there was a negative dip into the Great Recession beginning 2008 Q1, a rebound peaking with the 2009 Q4, a downward trend in 2010 Q1 and Q2. The USA economy appeared to be at a crossroads in Q2: a continuing downwards trend towards zero growth or a bounce upwards from there? The Q3 +2.5% is a positive bounce upwards. The chart covers the last 23 quarters (5+ years) of USA GDP as reported by BEA from 2005 Q1 through 2010 Q3.

The moving 4-quarter average (1 year) is now +3.23%, which is just above a break-even economy on jobs, creating a small net increase in jobs - but is not robust. The 23-quarter average is +1.23% per quarter, which is a stalled economy, a flat economy, that is not producing jobs and has an increasing unemployment rate. However, the current Q3 GDP +2.5% is well above this average.




OECD: GDP Growth Projections by Quarter

OECD: GDP Growth Projections by Quarter (Chart) Below is the OECD GDP Growth Projections by Quarter for the USA, Japan, the Euro Area, and the entire OECD. These are annualized percentage growth rates. The chart is for 10 quarters, from Q3 2010 through Q4 2011. The USA lowest quarter is +1.9% in Q4 2010 (now) and the highest is +3.7% in Q4 2012 (2 years from now). The Japan lowest quarter is +0.6% in Q2 2011 and the highest is +2.7% in Q1 2011 (next quarter). The Euro Area lowest quarter is +1.3% in both Q4 2010 (now) and Q1 2012 (next quarter). The highest quarter is +2.2% in both Q3 2012 and Q4 2012 (2 years from now). The Total OECD lowest quarter is +1.7% in Q4 2010 (now) and the highest is +3.2% in Q4 2012 (2 years from now). No negative GDP quarters are projected nor on the graph.




Links

USA & global economic news & analysis. There is always good/bad economic news, no matter how good/bad times are.

USA financial system, banking, Federal Reserve, USA & global economic news.


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USA Monthly Consumer Confidence Index at 5-Month High (Chart) "Suggests the economy is still expanding, albeit slowly"

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USA Economy: "Consumer confidence is now at its highest level in five months, a welcome sign as we enter the holiday season"


USA Monthly Consumer Confidence at 5-Month High in November

Official Statement "The Conference Board Consumer Confidence Index®, which had improved in October, increased further in November. The Index now stands at 54.1 (1985=100), up from 49.9 in October. The Present Situation Index rose to 24.0 from 23.5. The Expectations Index increased to 74.2 from 67.5 last month. Says Lynn Franco, Director of The Conference Board Consumer Research Center: “Consumer confidence is now at its highest level in five months, a welcome sign as we enter the holiday season. Consumers’ assessment of the current state of the economy and job market, while only slightly better than last month, suggests the economy is still expanding, albeit slowly. Expectations, the main driver of this month’s increase in confidence, are now at the highest level since May (Exp. Index, 84.6). Hopefully, the improvement in consumers’ mood will continue in the months ahead.”

Cycle History The current Consumer Confidence Index (CCI) in November of 54.1 (preliminary) is down -57.8 and -52% from the cyclical peak 111.9 in July 2007. The current CCI is up +28.8 and +114% from the cyclical bottom of 25.3 in February 2009. Therefore, the CCI continues much closer to the cyclical low than to the high.

Trend The current trend is now upwards. The November CCI of 54.1 (preliminary) is now above the 12-month moving average of 53.4, after being below the prior 5 consecutive  months. The  current CCI is above the 24-month moving average of 48.7 and has been for 9 consecutive months. The current CCI is now above the 36-month moving average of 53.2, after being below the prior 5 consecutive months. (The 12-month, 24-month, and 36-month moving averages charts are not shown on this page).

Monthly Consumer Confidence Index (Chart) Below is a chart of the past 41 months of The Conference Board CCI from the July 2007 cyclical high of 111.9 through the latest month reported, November 2010 54.1 (preliminary). As can be seen, the CCI bottomed in February 2009 and the Great Recession officially ended in June 2009. After a peak in May 2009 of 54.8, the CCI has been in a range from a low of 46.4 in February 2010 to a high of 62.7 in May 2010. The current CCI of 54.1 (preliminary) has now increased for 2 months to stay above the recent lows of 48.6 in September 2010 and 46.4 in February 2010.



Commentary The November Consumer Confidence Index of  54.1 has now risen above the recent lows of 48.6 in September 2010 and 46.4 in February 2010.  As with other November data and the Thomson Reuters/University of Michigan's November reading on consumer sentiment at a 5-month high also, this upwards bounce was expected.  The CCI continues closer to the cyclical low of 25.3 in February 2009 than the cyclical high of 111.9 in July 2007, as evidenced by the above chart. However, this is positive news and the December CCI should increase also.

Links
The Conference Board TCB
*Data courtesy of The Conference Board*


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Friday, November 26, 2010

USA Economic Weekly Leading Index at 27-Week High (Charts) *WLI continues uptrend*

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ECRI: Economic Weekly Leading Index and Annualized Growth Rate


USA Economic Weekly Leading Index at 27-Week High
USA WLI Annualized Growth Rate at 25-Week High

The Weekly Leading Index page has been updated with the latest report by the Economic Cycle Research Institute for the week ended November 19, 2010. The related charts (Weekly Leading Index and Annualized Growth Rate) have also been updated. A video of a recent interview of Laksham Achuthan, Managing Director of ECRI, discussing no double dip recession and no rapid recovery, has also been included.


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Wednesday, November 24, 2010

USA Weekly Unemployment Claims Lowest Since July 2008! (Charts) *Bonus Chart: The Great Recession*

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United States Department of Labor: Unemployment Insurance Weekly Claims Report


USA Weekly Unemployment Claims Lowest since July 19, 2008!
4-Week Moving Average Lowest since August 9, 2008!

The Weekly Unemployment Claims page has been updated with the latest report by the U.S. Department of Labor for the week ended November 20, 2010. The related charts (4-Week Moving Average and Weekly Unemployment Insurance Claims) for the past 52 weeks have also been updated.

Below is a bonus chart, showing weekly unemployment claims from the week ended December 19, 2007 through the latest week reported, November 20, 2010 (3+ years). Additional charts are posted on the Weekly Unemployment Claims page.



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Tuesday, November 23, 2010

IMF World Economic Outlook (Video, Charts) "Recovery proceeding broadly as expected"

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IMF World Economic Outlook (October 2010): Recovery, Risk, Rebalancing


IMF: Economic Recovery Is Proceeding Broadly As Expected, But Downside Risks Remain Elevated

World Economic Outlook (International Monetary Fund) "Thus far, economic recovery is proceeding broadly as expected, but downside risks remain elevated. Most advanced economies and a few emerging economies still face large adjustments. Their recoveries are proceeding at a sluggish pace, and high unemployment poses major social challenges. By contrast, many emerging and developing economies are again seeing strong growth, because they did not experience major financial excesses just prior to the Great Recession. Sustained, healthy recovery rests on two rebalancing acts: internal rebalancing, with a strengthening of private demand in advanced economies, allowing for fiscal consolidation; and external rebalancing, with an increase in net exports in deficit countries, such as the United States, and a decrease in net exports in surplus countries, notably emerging Asia. The two interact in strong ways. Increased net exports in advanced economies imply higher demand and higher growth, allowing more room for fiscal consolidation. Strengthened domestic demand helps emerging market economies maintain growth in the face of lower exports. A number of policies are required to support these rebalancing acts. In advanced economies, the repair and reform of the financial sector need to accelerate to allow a resumption of healthy credit growth. In addition, fiscal adjustment needs to start in earnest in 2011. Specific plans to cut future budget deficits are urgently needed now to create new room for fiscal policy maneuver. If global growth threatens to slow appreciably more than expected, countries with fiscal room could postpone some of the planned consolidation. Meanwhile, key emerging economies will need to further develop domestic sources of growth, with the support of greater exchange rate flexibility."

Recovery "Recovery is proceeding broadly as expected, but downside risks remain."

Risk "Underlying sovereign and banking vulnerabilities pose a significant challenge amid lingering concerns about risks to the global recovery. Overall, however, heightened economic uncertainty, continued deleveraging, and sovereign spillovers imply that core banking systems remain vulnerable to confidence shocks and are heavily reliant on government or central bank support."

Rebalancing "First, internal rebalancing: When private demand collapsed, fiscal stimulus helped alleviate the fall in output. But fiscal stimulus has to eventually give way to fiscal consolidation, and private demand must be strong enough to take the lead and sustain growth. Second, external rebalancing: Many advanced economies, most notably the United States, which relied excessively on domestic demand, must now rely more on net exports. Many emerging market economies, most notably China, which relied excessively on net exports, must now rely more on domestic demand. These two rebalancing acts are taking place too slowly."

IMF Video Leaders from academia, civil society, government, and the private sector around the world discuss the global recovery, the rebalancing of the world economy, and IMF governance reform. 


IMF: GDP Actual and Projected by Year (Chart) Below is the IMF GDP Actual and Projected by Year for the World, China, Euro Area, and USA. These are annual percentage growth rates. The chart is for 4 years: 2008 actual, 2009 actual, 2010 projected, and 2011 projected. All peak in 2010 and dip in 2011.



IMF: GDP Actual and Projected by Year (Chart) Below is the IMF GDP Actual and Projected by Year for the Japan, UK, India, and Brazil. These are annual percentage growth rates. The chart is for 4 years: 2008 actual, 2009 actual, 2010 projected, and 2011 projected. Japan, India, and Brazil peak in 2010 and dip in 2011, while UK increases  from 2010 to 2011.



Commentary The IMF World Economic Outlook is  positive in reporting the recovery is overall proceeding worldwide but does note risk to the recovery by both sovereign debt and financial system problems. Of interest is the recognition by the IMF that a rebalancing of trade, and currency valuations, is necessary to increase exports from developed nations, in particular the USA. Of course, the developing nations, the export nations, would need to increase imports and/or decrease exports from developed nations in this rebalancing scenario. The USA and China trade relationship is a prime example of what the IMF is addressing. However, the issue is not just an adjustment of currency valuations but cost of labor. That is, cheap labor will offset the currency valuation adjustments to some extent.


About the IMF

Overview The International Monetary Fund (IMF) is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.

What The IMF promotes international monetary cooperation and exchange rate stability, facilitates the balanced growth of international trade, and provides resources to help members in balance of payments difficulties or to assist with poverty reduction.

Membership The IMF has 187 member countries. It is a specialized agency of the United Nations but has its own charter, governing structure, and finances. Its members are represented through a quota system broadly based on their relative size in the global economy.

How Through its economic surveillance, the IMF keeps track of the economic health of its member countries, alerting them to risks on the horizon and providing policy advice. It also lends to countries in difficulty, and provides technical assistance and training to help countries improve economic management. This work is backed by IMF research and statistics.

Collaboration The IMF works with other international organizations to promote growth and poverty reduction. It also interacts with think tanks, civil society, and the media on a daily basis.


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USA Q3 GDP Revised Upwards to +2.5% (Charts) "Sharp deceleration in imports"

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USA Economy: positive contributions from personal consumption expenditures (PCE) & sharp deceleration in imports


USA Q3 GDP Second Estimate +2.5%

Official Statement (Bureau of Economic Analysis) At bottom of this post.

USA GDP Q3 Second Estimate The Bureau of Economic Analysis released the Second Estimate of 2010 Q3 GDP which was +2.5%, for a total GDP of $14.75 trillion. 2010 Q2 GDP was +1.7%, so the second estimate of Q3 is a good and surprising improvement, but below the Q1 GDP of +3.7% and well below the 2009 Q4 GDP of +5.0%.

Elusive GDP +3.0% A +3.0% annualized GDP growth rate is generally accepted as the minimum necessary to generate some jobs  growth. Therefore, the USA is growing at approximately 5/6 (83%) of the rate necessary to bring down the unemployment rate. The Big Question is where is the USA economy headed? Three scenarios are being much discussed: 1) a double dip recession whereby the GDP will turn negative, 2) the economy will continue this "bottom bouncing" with very slow growth, thereby continuing a high unemployment rate (i.e., less than +3.0% growth), or 3) the bottom is in and GDP growth will accelerate, and happy days will be here again. Scenario 2) with USA slow economic growth appears to be the consensus.

USA GDP by Quarter (Chart) The chart below is the annualized percentage change of the GDP (seasonally adjusted at annual rate) from the preceding quarter, the most common GDP measure. As can be seen, there was a negative dip into the Great Recession beginning 2008 Q1, a rebound peaking with the 2009 Q4, a downward trend in 2010 Q1 and Q2. The USA economy appeared to be at a crossroads in Q2: a continuing downwards trend towards zero growth or a bounce upwards from there? The Q3 +2.5% is a positive bounce upwards. The chart covers the last 23 quarters (5+ years) of USA GDP as reported by BEA from 2005 Q1 through 2010 Q3.

The moving 4-quarter average (1 year) is now +3.23%, which is just above a break-even economy on jobs, creating a small net increase in jobs - but is not robust. The 23-quarter average is +1.23% per quarter, which is a stalled economy, a flat economy, that is not producing jobs and has an increasing unemployment rate. However, the current Q3 GDP +2.5% is well above this average.




USA GDP by Quarter (Chart) The chart below is the GDP (seasonally adjusted at annual rate) in total current dollars. As can be seen, the USA economy peaked in 2008 Q3, bottomed in 2009 Q1 and Q2, now has increased 5 consecutive quarters, and exceeded the previous peak in 2010 Q2. The chart covers the last 23 quarters (5+ years) of USA GDP as reported by BEA from 2005 Q1 through 2010 Q3.




The Bureau of Economic Analysis Commentary on the 2010 Q3 GDP of +2.5% (Second Estimate)

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 2.5 percent in the third quarter of 2010, (that is, from the second quarter to the third quarter), according to the "second" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 1.7 percent.

The GDP estimates released today are based on more complete source data than were available for the advance estimate issued last month. In the advance estimate, the increase in real GDP was 2.0 percent (see "Revisions" on page 3).

The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, nonresidential fixed investment, exports, and federal government spending that were partly offset by a negative contribution from residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

The acceleration in real GDP in the third quarter primarily reflected a sharp deceleration in imports and accelerations in private inventory investment and in PCE that were partly offset by a downturn in residential fixed investment and decelerations in nonresidential fixed investment and in exports.


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Saturday, November 20, 2010

OECD: Economic Recovery Underway, Slower Than Expected (Video, Charts) *Challenge is self-sustained growth*

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OECD Economic Outlook (November 18, 2010)


OECD: Economic Growth Picking Up, But Uneven

Economic Outlook The Organisation For Economic Co-Operation And Development has issued an Economic Outlook. OECD Chief Economist and Deputy Secretary-General Pier Carlo Padoan stated, "The recovery is underway, but it's going slower than we expected a few months back. It's also uneven, there might be uncertainties down the road. It is the combination of factors that are pulling down the recovery, including the withdrawal of fiscal stimulus, but other factors are taking their place especially through private investment. So, on balance, we will see a stronger growth next year and the year after that.”

Challenge is Transition from "Policy-Driven Recovery" to "Self-Sustained Growth" "The global recovery has been underway for some time now, although unemployment remains persistently high in many countries. Growth has been much stronger in emerging market economies, but remains weak and uneven in much of the OECD, and has faltered recently. As financial markets continue to normalise, and households and firms reduce their indebtedness, growth is projected to gradually strengthen in the OECD area in 2011-12. Against such background, the challenge will be to guide the transition from a policy-driven recovery to self-sustained growth. As stimulus is withdrawn, policy will have to provide a credible medium-term framework, including for the financial sector, to stabilise expectations and strengthen confidence. To this effect, international collaboration, notably within the G20 process, will be essential."

Enhanced Confidence "Enhanced confidence could result in a faster-than-projected recovery, especially given the much improved position of corporations and the strengthening position of households. However, there are significant risks on the downside, notably those stemming from renewed declines in house prices in the United States and the United Kingdom, high sovereign debt in some countries, and possible abrupt reversals in government bond yields. Were some of them to materialise and threaten to derail the recovery, additional policy responses would be warranted in countries that still have room for manoeuvre."
 
OECD Video Pier Carlo Padoan, Chief Economist of the OECD, says economic activity will pick up steam, but the recovery is uneven across OECD countries.



OECD: GDP Growth Projections by Quarter (Chart) Below is the OECD GDP Growth Projections by Quarter for the USA, Japan, the Euro Area, and the entire OECD. These are annualized percentage growth rates. The chart is for 10 quarters, from Q3 2010 through Q4 2011. The USA lowest quarter is +1.9% in Q4 2010 (now) and the highest is +3.7% in Q4 2012 (2 years from now). The Japan lowest quarter is +0.6% in Q2 2011 and the highest is +2.7% in Q1 2011 (next quarter). The Euro Area lowest quarter is +1.3% in both Q4 2010 (now) and Q1 2012 (next quarter). The highest quarter is +2.2% in both Q3 2012 and Q4 2012 (2 years from now). The Total OECD lowest quarter is +1.7% in Q4 2010 (now) and the highest is +3.2% in Q4 2012 (2 years from now). No negative GDP quarters are projected nor on the graph.



OECD: GDP Growth Projections by Quarter (Chart) Below is the OECD GDP Growth Projections by Year for the USA, Japan, the Euro Area, and the entire OECD. These are annual percentage growth rates. The chart is for 3 years: 2010, 2011, and 2012. The USA is a lackluster +2.7% for 2010, dips to a mediocre +2.2% in 2011, and then increases to flat +3.1% in 2012.  Japan is a healthy +3.7% in 2011, dropping to a worsening +1.7% in 2012, and dropping even further to discouraging +1.3% in 2012. The Euro Area is a mediocre +1.7% in 2011, continues a flat +1.7% in 2012, and increases slightly to an ongoing mediocre +2.0% in 2012. The Total OECD is a reasonable +2.8% in 2011, dropping to a mediocre +2.3% in 2012, and rebounding to a disappointing +2.8% in 2012.



Commentary The OECD statement said it all, "the challenge will be to guide the transition from a policy-driven recovery to self-sustained growth". That is, from government intervention, especially fiscal stimulus and quantitative easing, and hence increases in sovereign debt and ongoing debasements of currencies, to self-sustaining, growing economies. The USA and UK are of especial note facing this dilemma. The OECD GDP Growth Projections are hopefully low or this will be a protracted, and somewhat painful, recovery in the next 2 years. A GDP growth rate of +3.0% is considered "break-even" for employment - some jobs are being created but economic, and employment, growth is not robust. Based on this premise, the USA muddles along and achieves break-even in 2012, Japan and the Euro Area have problems ahead, and the Total OECD continues just below break-even. Overall, these projections are not positive or encouraging.


About the OECD

The OECD has 33 member countries, including the USA and Japan but not China and Russia. OECD brings together the governments of countries committed to democracy and the market economy from around the world to:
Support sustainable economic growth
Boost employment
Raise living standards
Maintain financial stability
Assist other countries' economic development
Contribute to growth in world trade
The Organisation provides a setting where governments compare policy experiences, seek answers to common problems, identify good practice and coordinate domestic and international policies.

The 33 OECD member countries are: Australia, Austria, Belgium, Canada, Chili, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, (South) Korea, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States, plus the Euro Area and European Union. Accession countries are Estonia and Russian Federation. Enhanced Engagement Economies are Brazil, China, India, Indonesia, and South Africa. Some Non-Member Economies are also assessed by the OECD.



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

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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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