The Conference Board CEI for the U.S. continued falling in March, driven by further declines in employment and industrial production. In the six months through March, the index decreased 3.0 percent (about a -5.8 percent annual rate), faster than the decline of 2.0 percent (a -3.9 percent annual rate) for the previous six months. In March, the lagging economic index for the U.S. fell by the same amount as the coincident economic index, and as a result, the coincident to lagging ratio remained unchanged. Meanwhile, real GDP contracted at an average annual rate of 3.5 percent in the second half of 2008 (including a decline of 6.3 percent annual rate in the fourth quarter).
The Conference Board LEI for the U.S. remains on a general downtrend that began in July 2007, with widespread weaknesses among its components. However, its rate of decline has moderated somewhat this year. The Conference Board CEI for the U.S. has been on a declining trend since November 2007, although it has also decreased at a modestly slower pace in recent months. All in all, the behavior of the composite economic indexes suggests that the economic recession that started in December 2007 will continue in the near term, but that the contraction in activity could become less severe in upcoming months.
LEADING INDICATORS
Three of the ten indicators that make up The Conference Board LEI for the U.S. increased in March. The positive contributors - beginning with the largest positive contributor - were real money supply, interest rate spread, and the index of consumer expectations. The negative contributors - beginning with the largest negative contributor - were building permits, stock prices, index of supplier deliveries (vendor performance), average weekly manufacturing hours, average weekly initial claims for unemployment insurance (inverted), and manufacturers' new orders for nondefense capital goods. Manufacturers' new orders for consumer goods and materials held steady in March.
The Conference Board LEI for the U.S. now stands at 98.1 (2004=100). Based on revised data, this index decreased 0.2 percent in February and decreased 0.2 percent in January. During the six-month span through March, the leading economic index decreased 2.5 percent, with two out of ten components advancing (diffusion index, six-month span equals 20 percent).
COINCIDENT INDICATORS
Two of the four indicators that make up The Conference Board CEI for the U.S. increased in March. The positive contributors to the index - beginning with the largest positive contributor - were personal income less transfer payments* and manufacturing and trade sales. The negative contributors - beginning with the largest negative contributor - were employees on nonagricultural payrolls and industrial production.
The Conference Board CEI for the U.S. now stands at 101.5 (2004=100). This index decreased 0.6 percent in February and decreased 0.9 percent in January. During the six-month period through March, the coincident economic index decreased 3.0 percent, with none of the four components advancing (diffusion index, six-month span equals 0 percent).
LAGGING INDICATORS
The Conference Board LAG for the U.S. stands at 113.3 (2004=100) in March, with one of the seven components advancing. The positive contributor to the index was the ratio of consumer installment credit to personal income. The negative contributors - beginning with the largest negative contributor - were commercial and industrial loans outstanding, change in labor cost per unit of output, and average duration of unemployment (inverted). The average prime rate charged by banks, ratio of manufacturing and trade inventories to sales and change in CPI for services held steady in March. Based on revised data, the lagging economic index decreased 0.3 percent in February and decreased 0.2 percent in January.
