The Conference Board’s index of indicators is down … again

There are a lot of feelings and opinions out there about how the economy’s doing. Then there are data points, a little more objective and up to date, that sometimes tell us a bit about where it’s going. We got one like that Thursday: The Conference Board’s Leading Economic Index. It crunches together 10 forward-looking indicators to suss out what growth will look like in the near future.  

In October, the LEI was down by 0.4%, after being down in September and the month before that — going all the way back to early this year. What could it be telling us?

The Leading Economic Index uses data on manufacturing, homebuilding, unemployment, interest rates, stock prices and consumer sentiment. Economist Stephanie Guichard at The Conference Board, noting that the LEI was down last month, said “it has also been declining for almost three years now.”

The trend has been bad, but the declines are slowing down. 

“This is a positive development. It means that there are still headwinds to economic growth, but less than a few months ago,” she said.

And the LEI is no longer flashing warning signs of recession to come. Which makes sense, said analyst Sam Stovall, chief investment strategist at CFRA Research.

“Looking at real gross domestic product, expected to be up 2.9% in 2024, 2.3% in 2025,” he said.

Stovall said you can also look at the stock market — which, yes, isn’t the economy — but is often a harbinger.

“The stock market is a good predictor of economic growth trends. Historically the market has anticipated the economy by six to seven months,” Stovall said.

And the S&P 500 index has been hitting record highs. 

“Objectively speaking, the economy’s doing very well, exceptionally well,” said Mark Zandi, chief economist at Moody’s Analytics.

He said The Conference Board’s LEI may still be in the doldrums, but most everything else looks good, starting with the job market.

“Creating a lot of jobs, across lots of industries, unemployment’s very low. Economists not long ago were thinking recession, right? I mean, not this go-around,” he said.

For warning signs of recession, Zandi said he looks to unemployment claims.

“As long as they remain low, layoffs are low, consumers are going to continue to do their thing. So you look at the LEI, you think the world is going to fall into pieces, you look at the [unemployment insurance] claims, you go, ‘Eh, no, that’s not happening,'” he said.

Last week, jobless claims fell again, to the lowest level in more than six months.