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
- Average weekly hours, manufacturing
- Average weekly initial claims for unemployment insurance
- Manufacturers’ new orders, consumer goods and materials
- ISM® Index of New Orders
- Manufacturers’ new orders, nondefense capital goods excluding aircraft orders
- Building permits, new private housing units
- Stock prices, 500 common stocks
- Leading Credit Index™
- Interest rate spread, 10-year Treasury bonds less federal funds
- Average consumer expectations for business conditions
Comments
- 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
Geometry dash an interesting geometry game. With vibrant sound, beautiful graphics, you will enjoy the most refreshing game. Your task is to control the geometric blocks to overcome all obstacles.
Use the mouse to control
My friends told me about https://paperwall101.com . I’ve gone there to read various templates of A-winning academic papers. They were absolutely free.
So yes it’s the way to stay young healthy and fit for Innistaigh Mountain inhabitants. Let me share the post with my https://icasinoreviews.info/playtech-casino-nz/ blog lover fellows. I really feel enthusiastic for blogging now.
Of course the stock market is a leading indicator. How accurate it is, they can determine by regression, and they use that to weight it’s contribution to the leading indicator index. The stock market appears to be in a bear market already, and we are clearly not in recession now, but well may be in a few months. If the recession will start in 4 months, and the market is already signalling it, that’s what a leading indicator does.
Exactly. Maybe Mish means stock market value is not a leading indicator — it’s still high while recession knocks on the door. But market direction seems to be.
The old truism was that the stock market leads the economy by 6 to 9 months. In 2007 the market lead the recession by 2 months.
Interesting – “Death Cross” of LEI downward on CEI before every recession.
We shall see what the near future shows.