IB Net Payout Yields Model

Leading Economic Indicators Continue to Soar

One of the most important indicators and one that has been grossly overlooked by the media continues Leading Economic Indicators of the Conference Board. The last 6 months show a annual growth rate of 6%. Sure sounds like a V to me. Even the coincident indicator was flat in July showing that the economy has clearly leveled out and is ready for substantial growth. Whats even more impressive is that if Consumer Confidence were to turn positive, this number would be off the charts bullish. It amazes me that such a predictor of the future could be this positive yet consumers are so negative. All consumers need to do is turn bullish and life is good. Incredible!

Highlights of the LEI section of the report:

  • The Conference Board LEI for the U.S. rose again in July, its fourth consecutive increase. The six-month change in the index has risen to 3.0 percent (a 6.2 percent annual rate) in the period through July, up substantially from -2.8 percent (a -5.4 percent annual rate) for the previous six months, and the strengths among the leading indicators have grown more widespread in recent months. The interest rate spread, initial unemployment claims and the average workweek made large positive contributions to the index this month, more than offsetting the negative contributions from consumer expectations, real money supply, and building permits.

  • LEADING INDICATORS. Six of the ten indicators that make up The Conference Board LEI for the U.S. increased in July. The positive contributors – beginning with the largest positive contributor – were interest rate spread, average weekly initial claims for unemployment insurance (inverted), average weekly manufacturing hours, index of supplier deliveries (vendor performance), stock prices, and manufacturers' new orders for nondefense capital goods*. The negative contributors – beginning with the largest negative contributor – were index of consumer expectations, real money supply*, and building permits. The manufacturers' new orders for consumer goods and materials* held steady in July.
  • The Conference Board LEI for the U.S. now stands at 101.6 (2004=100). Based on revised data, this index increased 0.8 percent in June and increased 1.2 percent in May. During the six-month span through July, the leading economic index increased 3.0 percent, with eight out of ten components advancing (diffusion index, six-month span equals 85 percent).


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