Conference Board Leading Economic Index Rose In October

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November 19, 2015 11:25am NYSE:DIA NYSE:SPY

economyJill Mislinski:  The Latest Conference Board Leading Economic Index (LEI) for October is now available. The index increase 0.6 percent from September’s 123.3. The latest indicator value came in above the 0.5 percent forecast by Investing.com.


Here is an overview from the LEI press release:

The Conference Board Leading Economic Index® (LEI) for the U.S. increased 0.6 percent in October to 124.1 (2010 = 100), following a 0.1 percent decline in September, and a 0.1 percent decline in August. [Full notes in PDF]

Here is a chart of the LEI series with documented recessions as identified by the NBER.

Conference Board's LEI

For additional perspective on this indicator, see the latest press release, which includes this overview:

“The U.S. LEI rose sharply in October, with the yield spread, stock prices, and building permits driving the increase,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “Despite lackluster third quarter growth, the economic outlook now appears to be improving. While the U.S. LEI’s six-month growth rate has moderated, the U.S. economy remains on track for continued expansion heading into 2016.”

For a better understanding of the relationship between the LEI and recessions, the next chart shows the percentage off the previous peak for the index and the number of months between the previous peak and official recessions.

LEI from Peak

LEI and Its Six-Month Smoothed Rate of Change

Based on suggestions from Neile Wolfe of Wells Fargo Advisors, LLC and Dwaine Van Vuuren of RecessionAlert, we can tighten the recession lead times for this indicator by plotting a smoothed six-month rate of change to further enhance our use of the Conference Board’s LEI as gauge of recession risk.

Smoothed LEI

As we can see, the LEI has historically dropped below its six-month moving average anywhere between 2 to 15 months before a recession. The latest reading of this smoothed rate-of-change suggests no near-term recession risk.

This article is brought to you courtesy of Jill Mislinski from Advisor Perspectives.


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