Friday, November 18, 2011

Leading Index Rebounds to Record High in Oct.

The Conference Board Leading Economic Index (LEI) for the U.S. increased 0.9 percent in October to 117.4, following  increases of 0.1 percent in September and 0.3 percent in August (see chart above).

Says Ataman Ozyildirim, economist at The Conference Board: “The October rebound of the LEI — largely due to the sharp pick-up in housing permits — suggests that the risk of an economic downturn has receded. Improving consumer expectations, stock markets, and labor market indicators also contributed to this month’s gain in the LEI as did the continuing positive contributions from the interest rate spread. The CEI also rose somewhat, led by higher industrial production and employment.”

Says Ken Goldstein, economist at The Conference Board: “The LEI is pointing to continued growth this winter, possibly even gaining a little momentum by spring. The lack of confidence has been the biggest obstacle in generating forward momentum, domestically or globally. As long as it lasts, there is a glimmer of hope.”


At 11/18/2011 5:35 PM, Blogger Hydra said...

The stock market shrugged this off today.

At 11/18/2011 6:01 PM, Blogger PeakTrader said...

The E.U. economy has lagged the U.S. economy badly for decades, and it may pull us into a double-dip in 2012 (particularly, since the U.S. economy has weakened substantially over the past two or three years).

At 11/18/2011 6:29 PM, Blogger PeakTrader said...

This comment has been removed by the author.

At 11/18/2011 6:32 PM, Blogger Buddy R Pacifico said...

The sluggish recovery is the enduring economy. Not robust but not a bust, delveraging ex fed gov.

At 11/18/2011 6:36 PM, Blogger PeakTrader said...

Also, I may add, if it weren't for thousands of years of accumulated wealth, E.U. countries would be Third World nations by now, or within a few years.

E.U. real per capita income is over $10,000 a year less than U.S. real per capita income (even with massive U.S. immigration of dirt poor people, and their children, while E.U. immigration was smaller with more educated and skilled workers).

The cost of living is about twice as high in the E.U. than the U.S..

GDP in the E.U. reflects more public (or state) goods, which are overvalued, while U.S. GDP reflects more private goods, which are undervalued. So, E.U. GDP is overstated, while U.S. GDP is understated.

At 11/18/2011 8:34 PM, Blogger Benjamin Cole said...

I love the shape of this leading index, but it suggests the US economy already is a house on fire--and we are barely flickering above the flatline.

If we had 4 percent real growth, and declining unemployment, I guess this index would knock the moon out of the sky.

At 11/18/2011 8:45 PM, Blogger J H Schumacher said...

A useless index. It shows great growth over the last three years when everyone knows we a re still in the Bush-Obama depression.

At 11/19/2011 8:30 AM, Blogger Ed R said...

Of the 10 or so components of this index, at least a couple (relating to manufacturing)are probably outdated, and two more (the monetary components) are greatly distorted because the economy is already so weak.

At 11/19/2011 10:16 AM, Blogger truth or consequences said...

Peak, not sure what your beef is with Europe? What is the connection with your rant and the subject at hand: "Leading index rebounds.."?

I wonder how the US would have fared if most of its major cities and most of it's production infrastructure would have been leveled and destroyed during the second world war?

You rant at Europe reminds me of the trash talk Mohammed Ali used to direct at Joe Frasier...and is just about as relevant.

At 11/19/2011 2:25 PM, Blogger PeakTrader said...

Truth or consequences, I hope you're not comparing the E.U. to Joe Frazier, particularly after I revealed the E.U. is more like Michael Moore doing a belly-flop at a diving competition.

At 11/19/2011 6:39 PM, Blogger truth or consequences said...

revealed??...LOL...I dunno where you got that inferiority complex about the's pretty funny.

What are you going to do when an item actually mentions Europe? Start a rant about China?

Is eveything a "contest" to you? What do you have planned after high school??

At 11/20/2011 11:14 AM, Blogger morganovich said...

this index is mistaking the direction of causality.

it is being driven almost entirely by money supply, rate spreads, and the S+P.

the assumption is that such things are demand driven based on underlying economic activity.

however, in a period of loose money, negative real rates, aggressive stimulus, and huge fed purchases of bonds, this model cannot distinguish "stimulus" and monetary expansion from growth.

it is mistaking supply for demand.

the failure of this model to correlate to measured economic activity of late should give one some real pause in using it as a predictive indicator.

At 11/20/2011 12:03 PM, Blogger PeakTrader said...

Although, the Conference Board's Leading Economic Index is rising, the Conference Board as of Nov 9th, 2011 is predicting slower growth in 2012 than 2011:


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