Leading Economic Index Increases Slightly in August 2010

The Conference Board’s Leading Economic Index (LEI) advanced 0.3% in August 2010.  Their statement read in part:

Says Ken Goldstein, economist at The Conference Board: “While the recession officially ended in June 2009, the recent pace of growth has been disappointingly slow, fueling concern that the economic recovery could fade and the U.S. could slide back into recession. However, latest data from the U.S. LEI suggest little change in economic conditions over the next few months. Expect more of the same – a weak economy with little forward momentum through 2010 and early 2011.”

Says Ataman Ozyildirim, economist at The Conference Board: “The U.S. LEI, which began rising three months before the end of the recession, remains on a general upward trend. However, the pace has been slowing. Correspondingly, current economic conditions, as measured by The Conference Board CEI, have been essentially flat since May, after reaching a bottom in June 2009. Taken together, the composite indexes are consistent with a slowly expanding economy in the near term.”

The Conference Board Coincident Economic Index® (CEI) for the U.S. was unchanged in August, remaining at 101.3 (2004 = 100), following a 0.1 percent increase in July, and no change in June. The Conference Board Lagging Economic Index® (LAG) increased 0.2 percent in August to 108.1 (2004 = 100), following a 0.4 percent increase in July, and a 0.1 percent increase in June.

Econintersect agrees with the conclusions of The Conference Board’s economists – it is consistent with Econintersect’s economic forecast.

However, Econintersect warns this leading indicator’s methodology is lacking as part of its basis being the old normal economy.  The components are:

Average weekly hours, manufacturing

Average weekly initial claims for unemployment insurance

Manufacturers’ new orders, consumer goods and materials

Index of supplier deliveries – vendor performance

Manufacturers’ new orders, nondefense capital goods

Building permits, new private housing units

Stock prices, 500 common stocks

Money supply, M2

Interest rate spread, 10-year Treasury bonds less federal funds

Index of consumer expectations.

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