Conference Board Leading Economic Indicators
Chart of the Week for Aug 15, 2008 - Aug 21, 2008
The Conference Board Leading Indicators Index, shown above, is a weighted average of ten key economic indicators designed to help anticipate short-term economic conditions. The indicator is expected to turn up before a recovery and turn down before an economic slump. The indicators comprising the index include: 10 year treasury/fed funds spread, M2 money supply, average manufacturing work week, S&P 500, average weekly unemployment, vendor performance of the National Association of Purchasing Managers ("NAPM") index, housing permits, consumer expectations, and manufacturer new orders. As a general guideline, three consecutive months of decline in the index is typically considered to be a sign of a pending economic downturn.
The chart above represents the monthly percentage change in the index from November 2006 to June 2008 (most recent data available). June's 0.1% drop was buoyed by a jump in NY City housing permits and a positively sloped yield curve (10 yr treasury/fed funds spread). Four of the ten indicators that comprise the leading index were positive in June. The top negative contributor was M2 money supply. After five consecutive monthly decreases the index stabilized in March and April and then fell in May and June. The index now sits at its lowest level since November 2004.
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