The Conference Board Leading Economic Index is an American economic leading indicator intended to forecast future economic activity. It is calculated by The Conference Board, a non-governmental organization, which determines the value of the index from the values of ten key variables. These variables have historically turned downward before a recession and upward before an expansion. The % change year over year of the Leading Economic Index is a lagging indicator of the market directions.
A Federal Reserve Bank of New York report What Predicts U.S. Recessions? uses each component of the Conference Board’s Leading Economic Index (LEI). That report said that the indicators signal peaks and troughs in the business cycle, and the aggregate index has been shown to drop ahead of recessions and rise before expansions.
Revisions to the The Conference Board Leading Economic Index effective with the January 26, 2012 release began using the new Leading Credit Index TM (LCI) … etc.
- The United States Department of Labor’s monthly report on the unemployment rate, average hourly earnings and the average workweek hours from the Employment Situation report
- The United States Department of Labor’s weekly report on first-time claims for state unemployment insurance
- The United States Census Bureau’s monthly consumer goods and materials report from the Preliminary Report on Manufacturers’ Shipments, Inventories, and Orders
- The United States Census Bureau’s monthly non-defense capital goods report from the Preliminary Report on Manufacturers’ Shipments, Inventories, and Orders
- The United States Census Bureau’s monthly report on building permits from the Housing Starts and Building Permits report
- The difference (spread) between the interest rates of 10-year United States Treasury notes and the federal funds rate
- The Federal Reserve’s inflation-adjusted measure of the M2 money supply
- The Institute for Supply Management’s monthly ISM Index of Manufacturing including: supplier deliveries, imports, production, inventories, new orders, new export orders, order backlogs, prices and employment.
- The S&P 500
- The University of Michigan Consumer Sentiment Index’s consumer expectations
- ^A Closer Look at the Conference Board Leading Economic Index | Andrew Kitchings, CAIA, ERP, FRM | Commonwealth Financial Network® | Aug 22, 2018
- ^What Predicts U.S. Recessions? Federal Reserve Bank of New York | Staff Reports | What Predicts U.S. Recessions? | Weiling Liu and Emanuel Moench | Staff Report No. 691 | September 2014
- ^Calculating the Composite Indexes
Ofer Abarbanel is a 25 year securities lending broker and expert who has advised many Israeli regulators, among them the Israel Tax Authority, with respect to stock loans, repurchase agreements and credit derivatives. Founder of TBIL.co STATX Fund.