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Economy in Brief

U.S. Leading Indicators Fall To The Lowest Level Since 2003
by Tom Moeller April 20, 2009

The Conference Board reported that the March composite index of leading economic indicators fell 0.3% to the lowest level since early-2003. The decline in the February index was revised to a shortfall of 0.2%. Foreshadowing the current recession, the index has been moving steadily lower since a 2007 peak.

Six of the ten components of the leading index fell last month including sharp declines in the length of the workweek, stock prices and building permits while initial unemployment insurance claims jumped.

The breadth of one-month increase amongst the leaders' 10 components fell back to 35% and over a six-month period the breadth of gain amongst the components remained minimal at just 20%.

The leading index is based on actual reports for eight economic data series. The Conference Board initially estimates two series, orders for consumer goods and orders for capital goods.

Continuing to reflect economic recession, the coincident indicators fell another 0.4% and they are off 4.9% during the last year. Half of the four component series fell during March with outsized declines registered by employment and production. Over the last ten years there has been a 76% correlation between this y/y change and real GDP.

The lagging index fell 0.4% after a 0.3% February decline. The ratio of coincident-to-lagging indicators (a measure of economic excess) remained stable at its lowest level since 1975.

The Conference Board figures are available in Haver's BCI database. Visit the Conference Board's site for coverage of leading indicator series from around the world.

Financial Innovation and Consumer Protection is Friday's speech by Fed Chairman Ben S. Bernanke and it is available here.

Monetary Policy in the Financial Crisis is Saturday's speech by Fed Vice Chairman Donald L. Cohn and it can be found here.

Business Cycle Indicators (%) March February January Dec. 6-Month % (AR) 2008 2007 2006
Leading -0.3 -0.2 -0.2 -4.9 -2.8 -0.3 1.5
Coincident -0.4 -0.6 -0.9 -5.8 -0.8 1.6 2.5
Lagging -0.4 -0.3 -0.2 -0.4 2.9 2.8 3.3
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