The Conference Board Leading Economic Index (LEI) is a composite index composed of ten indices which are thought to be sensitive to changes in the US economy. The Conference Board describes it as an index thought to signal peaks and troughs; turning points in the index have historically occurred prior to changes in aggregate economic activity. Recently, month-on-month changes in the LEI have been predominantly negative.
The Leading Economic Index declined by 0.3% during December, less than the -0.2% which had been expected and less than November’s revised figure of +0.1%. On an annual basis, the LEI slowed a little from November’s revised growth rate of 0.4% to 0.2%.
Towards the end of 2019, the Conference Board’s Senior Director of Economic Research, Ataman Ozyildirim, had predicted the US economy would end “on a weak note” with a growth rate just under 2%. After this latest report, he said financial conditions and consumers’ outlook for the economy “should support growth of about 2% through early 2020.”
Changes in the LEI over time can be large but once they are standardised, a clearer relationship with GDP emerges. The latest reading implies a year-on-year growth rate of 1.3% at the end of the June 2020 quarter.