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Economy in Brief

Leading Indicators Down Again
by Tom Moeller September 23, 2004

The Conference Board reported that the Composite Index of Leading Economic Indicators for August fell 0.3%, the third consecutive monthly decline. A 0.1% decline had been the Consensus expectation and July's decline was unrevised.

Among the 10 components only 30% rose over a one month span. A narrowing of the yield curve and lower building permits had the largest negative influences. Over a six month span 70% of the leaders rose.

The leading index is based on eight previously reported economic data series. Two series, orders for consumer goods and orders for capital goods, are estimated.

A 1997 article from the Federal Reserve Bank of St. Louis titled "Strengthening the Case for the Yield Curve as a Predictor of U.S. Recessions" can be found here.

The coincident indicators rose 0.2% and has not declined m/m since April of last year. During the last ten years there has been an 82% correlation between the six month growth in the coincident indicators and two quarter growth in real GDP.

The lagging indicators fell 0.1% and the ratio of the coincident to the lagging indicators, a measure of how the economy is performing relative to its excess, rose for the first month in three.

Visit the Conference Board's site for coverage of leading indicator series from around the world.

Business Cycle Indicators Aug July 6-Month Growth 2003 2002 2001
Leading -0.3% -0.3% 2.8% 1.3% 2.2% -0.8%
Coincident 0.2% 0.2% 2.4% 0.4% -0.5% -0.5%
Lagging -0.1% 0.6% -1.3% -2.2% -2.8% -1.4%
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