February 19, 2010The Conference Board Leading Economic Index (LEI) came out this week. The LEI increased 0.3% from December. Each month when the Conference Board releases the leading, coincident, and lagging indicators, my staff sends me an updated table of the numbers (see below). I use the table to spot changes in trend and momentum in the economy. I grade each indicator individually and as a group. This monthly exercise gives me a good snapshot of the health and strength of the economy.
What are my indicators signaling this month? The leaders continue to increase, but momentum is losing steam. The coincident indicators are showing modest improvement, but the strength of the recovery doesn’t instill confidence. The disconnect between the leaders and coincidents is a cause for concern. The ratio of coincident to lagging indicators is up nicely from its lows, but remains below the troughs of the last two recessions. For the recovery to gain traction and become self-sustaining, we need to see job growth. Jobless claims are down from their March peak but still elevated, and nonfarm payrolls still haven’t registered a meaningful monthly increase. The economy is shedding fewer jobs, but hiring remains elusive.
In summary: my indicators point to a real shaky recovery.
Click on the chart for a larger view.
Latest posts by Dick Young (see all)
- How Can You Spot a Loser in Investing? - December 12, 2018
- Can Politics Predict the Markets in 2019? - December 7, 2018
- Are You Investing in the Armored Truck of Financial Markets? - December 5, 2018