wsj_format_logo

The Conference Board’s composite index of leading indicators “slipped” in September for the fourth straight month, signaling that the economic soft patch will persist.

The fall of 0.1% to a reading of 115.6 in September, came after August’s 0.3% decline. Economists believe that three consecutive declines in the index typically signal a oncoming recession. (The counter argument is that small decreases may not suggest an imminent recession).

WSJ:

Wsj_economy_10212004193752 “While the leading index is not yet signaling a downturn, the growth rate of the leading index has slowed,” said Ken Goldstein, an economist with the Conference Board. Economic growth should continue, but more slowly than expected, he added. The index is designed to predict the economy’s path during the next three to six months.

Oil prices have had a negative impact on the economy, but not enough to produce a broad spike in inflation. Recent hurricanes may also have held down economic activity, the Conference Board said.

Four of the 10 components of the leading index increased in September, including the real money supply, stock prices, orders for nondefense plant and equipment, and building permits.

Among the negatives in September were slower vendor deliveries, a flattening bond-yield curve, a shorter factory workweek and higher initial claims for jobless benefits.

There is some small irony in this: Before President George W. Bush was sworn into office, his economic team had already been talking down the stock market and economy as “fragile” and “recessionary.” That was a smart strategy, as it gave them a plausible explanation for future poor economic performance and a causa belli, so to speak, for the tax cuts. (Yes, I know that’s not what it means — but since there was no true basis for war, let’s just apply the phrase to the tax cut).

If the incumbent is defeated, and John F. Kerry is elected, look for a similar jawboning between November 2nd and January 20th. The goals is to pressure Congress into signing off on many of the planned economic reforms during the Honeymoon period . . .

Sources:
Leading Indicators Fell Last Month
Decline is Fourth in a Row; Hurricanes, High Oil Prices Slowed Growth of Economy
By Michael Schroeder, Joseph Rebello
The Wall Street Journal
October22,2004;PageA2

http://online.wsj.com/article/0,,SB109836163427551746,00.html

Category: Finance

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

One Response to “LEI softens 4th straight month”

  1. BOPnews says:

    LEI softens 4th straight month

    The Conference Board’s composite index of leading indicators “slipped” in September for the fourth straight month, signaling that the economic soft patch will persist. The fall of 0.1% to a reading of 115.6 in September, came after August’s 0.3%…