May 22, 2009
Leading Indicators Send Message; Next Up Chicago Fed National Activity Index
By Cindy Ivanac-Lillig
The Conference Board’s Leading Indicator Index (LEI) came out yesterday and was in positive territory for the first time in 10 months (up 1%). The same report also includes the Coincident Index, which reflects the indicators that are closely tied to what is currently going on, and the Lagging Index, which reflects indicators that are historical in nature. Click here to see the report.
The LEI probably grabbed most of the headlines for two reasons: first, it was positive, which points to a recovery; and second, the expansion of monetary supply was not a contributing factor to its positive result, which indicates that there may be some signs of more stable/longer-term growth. For a complete list of the ten (10) indicators included in the LEI click here.
On Tuesday, the Chicago Fed’s National Activity Index (CFNAI) will be released. The CFNAI is a weighted average of 85 indicators of national economic activity. The CFNAI measures how far above, or how far below, our historical long-term growth rate we are performing. It has an impressive track record of correlating to quarterly real GDP growth (which makes it something of a coincident indicator-- an indicator that shows the current temperature of the economy). The CFNAI’s 3-month moving average turned slightly less negative in the last report, and it will be some additional good news if that continues on Tuesday. Check it out here.
If the CFNAI is showing a stabilized and perhaps improving situation on Tuesday, the question will increasingly become, when will the recovery start? Many analysts say that the LEI has a 2- to 10-month lag in terms of the time it would take before you would see actual GDP growth, which is a pretty big window.
Beyond looking at the trends of these indices, have our drastic economic changes rendered benchmarks for time lags, inflation periods, etc. less helpful this time around. What do you all think?
Posted by Cindy at May 22, 2009 10:41 PM
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realy good information
Posted by: blogg.no at June 16, 2010 5:49 AM
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