Conference Board Leading Economic Index: Record High in December, Annual Revisions
The latest Conference Board Leading Economic Index (LEI) for December increased to 107.0 from 106.4 in November. The Coincident Economic Index (CEI) came in at 102.8, up from the previous month. Annual benchmark revisions were made.
The Conference Board LEI for the U.S. increased for the third consecutive month in December, fueled by large positive contributions from the ISM® new orders index and financial components. In the second half of 2017, the leading economic index increased 3.1 percent (about a 6.3 percent annual rate), faster than the growth of 2.6 percent (about a 5.2 percent annual rate) during the first half of last year. Also, the strengths among the leading indicators have remained very 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 U.S. LEI continued rising rapidly in December, pointing to a continuation of strong economic growth in the first half of 2018. The passing of the tax plan is likely to provide even more tailwind to the current expansion,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “The gains among the leading indicators have been widespread, with most of the strength concentrated in new orders in manufacturing, consumers’ outlook on the economy, improving stock markets and financial conditions.”
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.