Leading Economic Index: Recession Is Ending; Welcome to the Economic Expansion of 2009
NEW YORK, August 20, 2009 -- The Conference Board's Leading Economic Index (LEI) for the U.S. increased 0.6% in July, following a 0.8% gain in June, a 1.2% rise in May and a 1.02% gain in April.
After having fallen steadily since reaching a peak in July 2007, The Conference Board LEI for the U.S. has increased sharply in the last four months, amid widespread strength among its components. As a result, the six-month growth rate in the index has accelerated to its highest rate since the middle of 2004.
Meanwhile, the decline in The Conference Board Coincident Economic Index (CEI) for the U.S. has gradually moderated in recent months. All in all, the behavior of the composite indexes suggests that the recession is bottoming out and that economic activity will likely begin to recover soon.
Says Ken Goldstein, Economist at The Conference Board: "The indicators suggest that the recession is bottoming out, and that economic activity will likely begin recovering soon. The Coincident Economic Index was flat in July – the first time it did not register a decline since October 2008. The Leading Economic Index, which has increased for four consecutive months, suggests that the CEI will turn positive soon."
MP: The four consecutive monthly increases (April, May, June and July) is the first time in five years (summer of 2004) of four straight monthly increases in the Index of Leading Economic Indicators. And the 3.78% four-month increase in the Leading Index from March (97.9) to July (101.6) 2009 is the largest percentage increase in the LEI for a four-month period since the 4.15% increase from October 2001 to February 2002 at the tail end of the 2001 recession.
The strength of the Leading Economic Index suggests that the recession is ending and we can expect economic expansion in the near future. Welcome to the Economic Expansion of 2009.
Originally posted at Carpe Diem.