The Conference Board: Economic Indicator Continues to Rise in June 2011

The Conference Board’s Leading Economic Indicator (LEI) continues its ever improving rise in June 2011, and, through innovative interpretation techniques, suggests growth will be slower through the Fall.

Says Ataman Ozyildirim, economist at The Conference Board: “The U.S. LEI continued to increase in June, but the strengths among the leading indicators have been balanced with the weaknesses in recent months. The Coincident Economic Index, a monthly measure of current economic activity, continued to increase slowly. The leading indicators point to slowly expanding economic activity in the coming months.”

Says Ken Goldstein, economist at The Conference Board: “The economy faced some recent unexpected headwinds, including a shortage of auto and electronic parts from Japan after the earthquake, and damaging tornado and flooding activity in the U.S. Another potential headwind is the debt ceiling issue, which could result in a financial crisis in the near term if not resolved. If these headwinds subside, the underlying trend of slow growth, as suggested by the LEI, should become more apparent over the next few months.

The LEI increased 0.3% in June to 115.3 following a 0.8% increase in May and a 0.3% decline in April.   According to the Conference Board, the largest positive contributions came from money supply, the interest rate spread, and building permits.

Even the Conference Board’s coincident indicator continues to rise despite much less good data.

This index is based to a large extent on monetary measures which have been extraordinarily stimulative with interest rates set at artificially low levels by the Federal Reserve.  For this reason, the hyper-values produced by this index are not necessarily linked to any real economic dynamics.  Econintersect does not believe this index is properly indicating the current economic dynamics.

On the other hand, ECRI’s WLI (which Econintersect reports on weekly) has the exact opposite trend lines.

Econintersect believes the USA economy saw a cycle peak in April 2011, and the economy is continuing to soften (analysis here).

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