The Conference Board Reports the LEI Increased Slightly in November.

NEW YORK, December 20, 2018…The Conference Board Leading Economic Index® (LEI) for the U.S. increased 0.2 percent in November to 111.8 (2016 = 100), following a 0.3 percent decline in October, and a 0.6 percent increase in September.

“The LEI increased slightly in November, but its overall pace of improvement has slowed in the last two months,” said Ataman Ozyildirim, Director of Economic Research at The Conference Board. “Despite the recent volatility in stock prices, the strengths among the leading indicators have been widespread. Solid GDP growth at about 2.8 percent should continue in early 2019, but the LEI suggests the economy is likely to moderate further in the second half of 2019.”

Ten LEI Components

  1. Average weekly hours, manufacturing
  2. Average weekly initial claims for unemployment insurance
  3. Manufacturers’ new orders, consumer goods and materials
  4. ISM® Index of New Orders
  5. Manufacturers' new orders, nondefense capital goods excluding aircraft orders
  6. Building permits, new private housing units
  7. Stock prices, 500 common stocks
  8. Leading Credit Index™
  9. Interest rate spread, 10-year Treasury bonds less federal funds
  10. Average consumer expectations for business conditions



  • The stock market is not a leading indicator of anything. It peaked in November of 2007. Recession hit the next month.
  • Interest rates spreads are flashing warning signals which the Conference Board misses. The board does not publish its methodology, but I believe the board wants to see an inversion between the Fed Funds Rate and the 10-year note before the spread has a negative impact on LEI. Japan has had many recessions without the yield curve inverting. I doubt we see the inversion signal the board is looking for.
  • Building permits are a leading indicator to a leading indicator, namely housing starts. What's being permitted may not be started.
  • There are three new order components all based on diffusion indexes that have known problems.
  • Consumer expectations are meaningless.

Up, Up and Away?

I think not.

Mike "Mish" Shedlock

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