Global| Apr 17 2008U.S. Leading Economic Indicators Up Slightly
by:Tom Moeller
|in:Economy in Brief
Summary
The composite index of leading economic indicators, reported by the Conference Board, increased 0.1% in March after an unrevised 0.3% February decline. It was the leaders' first increase in six months. During the last ten years there [...]
The composite index of leading economic indicators, reported by the Conference Board, increased 0.1% in March after an unrevised 0.3% February decline. It was the leaders' first increase in six months.
During the last ten years there has been a 59% correlation between the y/y change in the leading indicators index and the lagged change in real GDP.
The breadth of one month increase amongst the 10 components of the leading index improved to 60%. It was the first month over the break even level of 50% since last September. Over a six month period, however, the breadth of gain amongst the leaders components remained quite low at 30%.
Last month, a more positive yield spread between the 10 Year Treasury Bond and the Fed funds rate, stronger money supply growth and vendor performance made the largest positive contributions to the leading index. That was offset by lower stock prices, lower consumer expectations and higher claims for jobless insurance. 
The method of calculating the contribution to the leading index from the spread between 10 year Treasury securities and the Fed funds rate has been revised. A negative contribution will now occur only when the spread inverts rather than when declining as in the past. More details can be found here.
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 0.1% or the first gain in five months. Over the last ten years there has been an 86% correlation between the y/y change in the coincident indicators and real GDP growth. Half of the coincident series components fell.
The lagging index rose again as the average duration of unemployment rose. The ratio of coincident to lagging indicators (a measure of economic excess) fell yet again and was at its lowest since early 1991.Visit the Conference Board's site for coverage of leading indicator series from around the world.
| Business Cycle Indicators | March | February | Dec., 6 Month % (AR) | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|---|
| Leading | 0.1% | -0.3% | -3.3% | -0.4% | 1.3% | 2.7% |
| Coincident | 0.1% | -0.2% | -0.2% | 1.7% | 2.4% | 2.5% |
| Lagging | 0.3% | 0.3% | 2.9% | 2.9% | 3.1% | 3.1% |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
