Leading Economic Indicator Is Higher?? in May 2011

Bucking all other leading indicators, the Conference Board’s Leading Economic Indicator for May 2011 rose indicating the future will be better than today.

The Conference Board Leading Economic Index® (LEI) for the U.S. increased 0.8 percent in May to 114.7 (2004 = 100), following a 0.4 percent decline in April, and a 0.7 percent increase in March. The largest contributions came from the interest rate spread, consumer expectations, and housing permits.

Says Ataman Ozyildirim, economist at The Conference Board: “The U.S. LEI rebounded in May and resumed its upward trend with a majority of the components supporting this gain. The Coincident Economic Index, a monthly measure of current economic conditions, continued to increase slowly but steadily. Overall, despite short-term volatility, the composite indexes still point to expanding economic activity in the coming months.”

Says Ken Goldstein, economist at The Conference Board: “Modest economic growth is being buffeted by some strong headwinds, including high gas and food prices and a soft housing market. The economy will likely continue to grow through the summer and fall, however it will be choppy.”

The Conference Board Coincident Economic Index® (CEI) for the U.S. increased 0.1 percent in May to 102.9 (2004 = 100), following a 0.1 percent increase in April, and a 0.2 percent increase in March.

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 has forecast an economic peak in April (analysis here), and its indicator is falling.

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