The Conference Board has released its report on economic indicators. The report is signaling that recovery from the recession is about to begin or is in its beginning stages.
The Conference Board LEI for the U.S. increased sharply for the second consecutive month in May. In addition, the strengths among its components continued to exceed the weaknesses this month. Vendor performance, the interest rate spread, real money supply, stock prices, consumer expectations, and building permits contributed positively to the index, more than offsetting the negative contributions from weekly hours and initial unemployment claims. The index rose 1.2 percent (a 2.4 percent annual rate) between November 2008 and May 2009, the first time the index has increased over a six-month period since July 2007, and the strengths among the leading indicators have become balanced with the weaknesses during this period.
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LEADING INDICATORS. Seven of the ten indicators that make up The Conference Board LEI for the U.S. increased in May. The positive contributors — beginning with the largest positive contributor — were index of supplier deliveries (vendor performance), interest rate spread, stock prices, real money supply*, index of consumer expectations, building permits, and manufacturers’ new orders for nondefense capital goods*. The negative contributors — beginning with the largest negative contributor — were average weekly manufacturing hours, average weekly initial claims for unemployment insurance (inverted), and manufacturers’ new orders for consumer goods and materials*.
The Conference Board LEI for the U.S. now stands at 100.2 (2004=100). Based on revised data, this index increased 1.1 percent in April and decreased 0.3 percent in March. During the six-month span through May, the leading economic index increased 1.2 percent, with five out of ten components advancing (diffusion index, six-month span equals 50 percent).
Employment is a lagging indicator, so we probably won’t see a positive change in employment until the end of the year. This has been the longest and worst recession since the Great Depression. Thanks George W. Bush! Heckuva job!