The 2020 Mid-Year Economic Update_long

Leading Economic Index Posts Sixth Consecutive Increase

Numbers from The Conference Board suggest 'recovery is developing.'

The Conference Board Leading Economic Index for the U.S. increased for the sixth straight month in September, improving 1.0%. The Coincident Economic Index remained unchanged; the Lagging Economic Index declined 0.3%.

Except for the average workweek and building permits, all the leading indicators related to the LEI posted positive contributions in September. The LEI currently stands at 103.5 (2004=100).The six-month change in the index also continues to rise, now at 5.7% (an 11.8% annual rate) in the period through September, up from -2.7% (a -5.3% annual rate) for the previous six months. In addition, the strengths among the leading indicators have remained widespread in recent months.

The stagnation of the CEI for the U.S. follows small increases in the previous two months. Employment has continued to fall, while industrial production has risen for three straight months. Between March and September 2009, the index decreased 1.1% (a -2.2% annual rate), slower than the decline of 3.4% (a -6.8% annual rate) for the previous six months. The CEI is currently 99.9 (2004=100).

In September, the lagging economic index for the U.S. continued to decrease, and with the coincident economic index remaining unchanged, the coincident-to-lagging ratio increased again. Meanwhile, real GDP fell at a 0.7% annual rate in the second quarter, following a contraction of 6.4% annual rate for the first quarter of the year. The LAG now stands at 109.6 (2004=100).

Says Ken Goldstein, Economist at The Conference Board: “The LEI has risen for six consecutive months and the coincident economic index has increased in two of the last three months,” says Ken Goldstein, economist at The Conference Board. “These numbers strongly suggest that a recovery is developing. However, the intensity of that recovery will depend on how much, and how soon, demand picks up.”

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