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Economy in Brief

Leading Indicators Down
by Tom Moeller April 21, 2005

The Composite Index of Leading Economic Indicators reported by the Conference Board fell 0.4% in March, the second decline in three months. Six-month growth in the leaders fell further to -0.5%. Growth in the leaders deeper than -2.5% preceded past US recessions.

The breadth of one month gain amongst the 10 components of the leading index fell to a paltry 20% from a downwardly revised 40% in February. Higher claims for unemployment insurance had the largest negative effect pulling the leading index lower. Higher consumer goods orders and a steeper interest rate yield curve had the only positive influences.

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.

The coincident indicators rose 0.2% following a downwardly revised 0.1% gain in February. Six-month growth in the index was 3.1% and during the last ten years there has been an 84% correlation between six month growth in the coincident indicators and two quarter growth in real GDP.

The lagging indicators fell 0.1% due to a longer duration of unemployment and higher C&I loans.

The ratio of the coincident to the lagging indicators which measures actual economic performance relative to excess rose 0.3% (1.3% y/y) following a revised decline the prior month.

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

Chairman Alan Greenspan's testimony on Budget process reforms is available here.

Business Cycle Indicators Mar Feb 6-Month Chg 2004 2003 2002
Leading -0.4% 0.1% -0.5% 3.0% 1.3% 2.2%
Coincident 0.2% 0.1% 3.1% 2.6% 0.4% -0.5%
Lagging -0.1% 0.3% 0.4% -2.1% -1.9% -2.3%
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