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Leading Economic Indicators Index Fall Again

For the third time in four months, and 4th time in 6 months, the  leading economic indicators fell signaling a slow down in the economy, if not an outright recession.

In each of the past two months, the LEI  fell sharply. The greater than forecast 0.4% decline comes on top of a 0.5% drop in October.

At the same time, the Commerce Department reported a GDP of 4.9% for Q3. We have argued that the GDP is dramatically overstated, due to under-reported inflation.

Bloomberg:

"After having been essentially flat since early 2006, the leading index has weakened sharply in recent months, and it has declined to its lowest level since the middle of 2005.

Meanwhile, the coincident index has continued to increase throughout most of this period, but its growth has moderated recently. In addition, real GDP has continued to expand, growing at an average annual rate of 3.1 percent through the third quarter of the year (including a 4.9 percent annual rate growth in the third quarter). The recent behavior of the composite indexes suggest that while slow economic growth is likely in the near term, risks for further economic weakness have increased."

Look for more spin on this data from the usual suspects . . .

>

Sources:

U.S. LEADING ECONOMIC INDICATORS
Global Business Cycle Indicators  (PDF)
December 20, 2007      http://www.conference-board.org/economics/bci/pressRelease_output.cfm?cid=1

U.S. Leading Economic Indicator Index Fell 0.4%
Bob Willis
Bloomberg, Dec. 20  2007
http://www.bloomberg.com/apps/news?pid=20601087&sid=aUi7bpAXii1c& 

Thursday, December 20, 2007 | 10:55 AM | Permalink | Comments (17) | TrackBack (0)
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Comments

""After having been essentially flat since early 2006, the leading index has weakened sharply in recent months, and it has declined to its lowest level since the middle of 2005."

But it made no difference to the market as it got bullied up to record levels despite these and many other indicators that were essentially signaling what we already knew.

I want to see the mark-ups at each month end , qtr end, year end or whatever the excuse is to mark up stocks just because. We've become accustomed to just accepting these incidents as customary practice by the system but have we ever really examined why it's ok to inflate equities just because some mutual fund manager needs to "make" his /her qtr? We allow this (along with many other things) to just occur with no pushback at all.

This probably belongs in the previous thread but....

Ciao
MS

Posted by: michael schumacher | Dec 20, 2007 11:09:25 AM