Indicator Series Vol. 6: LEI v. MA

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Many market watchers know the value of the Conference Board’s Leading Economic Indicator Index. When the current release is compared to it’s own moving average, the ability to indicate economic turmoil is scary. As you can see from the graph above, since the 1960’s, whenever this index has dipped below it’s moving average of 18 months, a recession soon followed. It’s uncanny. Today’s reading does not indicate we are at a large risk of economic downturn, although an exogenous shock or a failure of this index to continue to capture it’s intended data could send the needle spinning.

Although not a panacea, this has proven reliable and is certainly worth a hard look when forming an opinion on the stage of our economy in the business cycle.

Source:Bloomberg

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