Leading Economic Index Increases in May

The Conference Board reported today that its Leading Economic Index (LEI) increased 0.3% in May to a four-year high of 95.8, following a 0.1% decline in April, and a 0.2% increase in March (see chart above).  Despite all of the recent challenges and headwinds facing the U.S. economy, especially the serious economic issues in Europe, the LEI has increased in 7 of the last 8 months starting in November 2011.  This ongoing improvement in the index that is constructed to predict the future direction of the U.S. economy, suggests that the U.S. economy will continue with moderate economic growth through the rest of the year, and is not currently threatened by a serious possibility of a double-dip recession.      

Says Ataman Ozyildirim, economist at The Conference Board: “The LEI rose in May, reversing the slight decline in April. Weakness in the average workweek in manufacturing, stock prices and consumer expectations kept the LEI from rising further. Its six-month growth rate remains in expansionary territory and well above its growth at the end of 2011, pointing to a relatively low risk of a downturn in the second half of 2012.”

Says Ken Goldstein, economist at The Conference Board: “Economic data in general reflect a U.S. economy that is growing modestly, neither losing nor gaining momentum. The result is more of a muddle through. Continued headwinds, both domestic and foreign, make further strengthening of the economy difficult.”