Conference Board Leading Economic Index: About Those Benchmark Revisions
January 23, 2015
by Doug Short
Today's release of the December Conference Board's Leading Economic Index (discussed here) included benchmark revisions in addition to the routine monthly revisions. Also the base year for the index was changed from 2004=100 to 2010=100. Today's press release included the following comment:
"These revisions do not change the cyclical properties of the indexes. The indexes are updated throughout the year, but only for the previous six months. Data revisions that fall outside of the moving six-month window are not incorporated until the benchmark revision is made and the entire histories of the indexes are recomputed. As a result, the revised indexes, in levels and month-on-month changes, will not be directly comparable to those issued prior to the benchmark revision."
How extensive were those benchmark revisions? One way to visual the magnitude is to calculate the cumulative growth of the previous and new benchmark series and overlay the two.
As we can readily see, the latest benchmark revisions extend back many years, and the general direction of the revision is quite obviously downward.