Conference Board Leading Economic Index: Growth Moderates

February 19, 2015

by Doug Short

The Latest Conference Board Leading Economic Index (LEI) for January is now available. The index rose 0.2 percent but December was revised downward from 0.5 percent to 0.4 percent and November from 0.4 percent to 0.2 percent. The latest number came in below the 0.3 percent forecast by Investing.com.

Here is an overview from the LEI technical notes:

The Conference Board LEI for the U.S. increased slightly in January. The gain was fueled mainly by the yield spread, consumer expectations for business conditions and the Leading Credit Index™ (inverted). In the six-month period ending January 2015, the leading economic index increased 2.3 percent (about a 4.6 percent annual rate), much slower than the growth of 4.1 percent (about an 8.4 percent annual rate) during the previous six months. However, the strengths among the leading indicators have remained widespread over the previous six months. [Full notes in PDF]

Here is a chart of the LEI series with documented recessions as identified by the NBER.

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And here is a closer look at this indicator since 2000. We can more readily see that the recovery from the 2000 trough weakened in 2012 but began trending higher in the latter part of the year.

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For a more details on the latest data, here is an excerpt from the press release:

“The U.S. Leading Economic Index increased again in January, but its pace of growth has mod erated in recent months,” said Ataman Ozyildirim, Economist at The Conference Board. “While the LEI suggests a positive short - term outlook in 2015, the lack of strong momentum in residential construction, along with a weak outlook for new orders in manufac turing, poses a dow nside risk for the U.S. economy.”

For a better understanding of the relationship between the LEI and recessions, the next chart shows the percentage off the previous peak for the index and the number of months between the previous peak and official recessions.

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Here is a look at the rate of change, which gives a closer look at behavior of the index in relation to recessions.

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And finally, here is the same snapshot, zoomed in to the data since 2000.

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Check back next month for an updated analysis.

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