Thursday, August 20, 2009

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.


At 8/20/2009 10:38 AM, Blogger Bill said...

Dr. Perry,

Do today's unemployment claims numbers suggest that the unemployment rate will go back up for August?

At 8/20/2009 10:47 AM, Anonymous Anonymous said...

At 8/20/2009 11:15 AM, Anonymous Benny The Real Libertarian said...

Good riddance to this recession, the worst in the postwar era. Call El Presidente Arbusto's farewell gift to America.
I have to heap kudos upon Dr. Perry for recognizing earlier than most this recession was ending.
I do wish Perry would now turn his estimable mental powers on the right way to create a sturdy financial system.
I sense we are on the cusp of another 20-year global economic boom. Like the last 20 years, but better. The globe generates plenty of capital, and R&D now takes place in North America, Asia, and Europe, on a wider scale than ever before. Very few good ideas do not receive venture capital--a lot different from 50 years ago. (Indeed, in the energy sector, there is so much capital sloshing about that even mediocre ideas are well-funded).
Our Achilles heel is our financial system, which seems to blow over in a stiff breeze, and which magnifies failings, rather than dampening them.
Yes, the free market is best--also for the financial system? No more FDIC? No more SEC? GNMA? FNMA?
I should would like to see some answers.

At 8/20/2009 2:55 PM, Blogger QT said...

While cracking out the champagne may seem tempting, Olivier Blanchard, Economic Counsellor and Director of the IMF Research Dept. suggests that the effects of the banking crisis and global recession are very far reaching.

At 8/20/2009 3:58 PM, Blogger QT said...

For those who missed the coverage on
Rose Friedman


At 8/20/2009 5:55 PM, Anonymous Anonymous said...

There's no doubt some indicators are turning. The trillion dollar question is whether it will turn again.

Initial unemployment claims rose for the second week, including the SA moving average. Ooops!

Foreclosure rates broke another record. Doh!

CRE property values just matched the decline in house prices and are still headed south. Aargh!

Consumer credit is the tightest in our lifetimes. Structured finance has disappeared. Eeek!

The peak hotel, retail, travel, leisure and house sale period just ended at weak levels- it's all downhill now. Lordy!

At 8/20/2009 8:54 PM, Blogger OBloodyHell said...

I think what we have seen is the beginning of the natural cycle of business. What will happen in the next six-twelve months as the impact of the downsides of the various Obama "fixes" ripple through the system will be.... "interesting" -- in the apocryphal Chinese sense of the word.


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