Conference Board Leading Economic Index: Continued Increases in August
The latest Conference Board Leading Economic Index (LEI) for August increased to 128.8 from 128.3 in July and is currently at another all-time high.
The Conference Board LEI for the U.S. increased again in August. Large positive contributions from building permits, the yield spread, and consumer expectations for business conditions more than offset the large negative contribution from initial claims for unemployment insurance. In the six-month period ending August 2017, the leading economic index increased 2.3 percent (about a 4.7 percent annual rate), an improvement from its growth of 2.0 percent (about a 4.1 percent annual rate) during the previous six months. Also, the strengths among the leading indicators have remained widespread. [Full notes in PDF]
Here is a log-scale chart of the LEI series with documented recessions as identified by the NBER. The use of a log scale gives us a better sense of the relative sizes of peaks and troughs than a more conventional linear scale.
For additional perspective on this indicator, see the latest press release, which includes this overview:
“The August gain is consistent with continuing growth in the U.S. economy for the second half of the year, which may even see a moderate pick up,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “While the economic impact of recent hurricanes is not fully reflected in the leading indicators yet, the underlying trends suggest that the current solid pace of growth should continue in the near term.”
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.