CB Leading Economic Index: Moderate Growth in September

The latest Conference Board Leading Economic Index (LEI) for September was up 0.2% from the August final figure of 117.3.

The Conference Board LEI for the U.S. increased again in September. Positive contributions from six out of ten components more than offset the negative contributions. The residential building permits component made the largest negative contribution. In the six-month period ending September 2021, the leading economic index increased 5.4 percent (about a 11.1 percent annual rate), faster than the growth of 3.7 percent (about a 7.6 percent annual rate) over the previous six months. In addition, the strengths among the leading indicators have remained more widespread than weaknesses.

The Conference Board CEI for the U.S., a measure of current economic activity, was unchanged in September. The coincident economic index rose 1.3 percent (about a 2.7 percent annual rate) between March and September 2021, down from growth of 2.1 percent (about a 4.1 percent annual rate) over the previous six months. Strengths among the coincident indicators have remained very widespread, with all but one component advancing over the past six months. The lagging economic index continued to increase in September; with CEI unchanged, the coincidentto-lagging ratio thus declined. Real GDP expanded at a 6.7 percent annual rate in the second quarter of the year, after increasing 6.3 percent (annual rate) in the first quarter. More

Here is a log-scale chart of the LEI series with documented recessions as identified by the NBER. The use of a log scale gives us a better sense of the relative sizes of peaks and troughs than a more conventional linear scale.

Conference Board's LEI

For additional perspective on this indicator, see the latest press release, which includes this overview:

NEW YORK, October 21, 2021…The Conference Board Leading Economic Index® (LEI) for the U.S. increased by 0.2 percent in September to 117.5 (2016 = 100), following a 0.8 percent increase in August and a 0.9 percent increase in July. “The U.S. LEI rose again in September, though at a slower rate, suggesting the economy remains on a more moderate growth trajectory compared to the first half of the year,” said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board. “The Delta variant, rising inflation fears, and supply chain disruptions are all creating headwinds for the US economy. Despite the LEI’s slower growth in recent months, the strengths among the components remain widespread. Indeed, The Conference Board continues to forecast strong growth ahead: 5.7 percent year-over-year for 2021 and 3.8 percent for 2022.”

For a better understanding of the relationship between the LEI and recessions, the next chart shows the percentage-off the previous peak for the index and the number of months between the previous peak and official recessions.