Leading Index: Economy Is Gaining Momentum

by: Mark J. Perry

The Conference Board reported today another sharp increase in its Leading Economic Index (LEI) for the month of December, as the index rose to the highest-ever level of 112.4 last month (see chart above). The December gain of 1% follows a 1.1% improvement in November, a 0.4% increase in October and a 0.55% gain in September. From the cyclical low of 97.9 in March 2009, the Leading Index has improved by 13.5 points. Here's more:

Ataman Ozyildirim, economist at The Conference Board said:

While the LEI points to an economic expansion that is gaining further traction, its components still suggest the expansion path may be uneven. December’s gain was led by housing permits, the interest rate spread, initial claims for unemployment insurance and consumer expectations. The large increases in December and November show that, after a brief pause in the second quarter of 2010, the LEI is resuming the upward trend that began in March 2009.

Says Ken Goldstein, economist at The Conference Board: “The four-month rise suggests the economy now has some wind in its sails; however, it still faces some strong headwinds in the medium-term. Overall economic activity is likely to continue to gain momentum in 2011.