What Are Leading Economic Indicators Telling Us?

by: Sold At The Top

Thursday’s results of the Conference Board’s Leading Economic Indicators showed another monthly increase, climbing 0.9% compared to October, bringing the annual increase to 5.96% and leaving the index at a level of 104.9.

On the face of it, this is clearly a bullish “Green Shoots” development, as this series (an aggregate of 10 component leading indices) is signaling a clear shift from leading contraction to expansion. The leading index, however, is strongly influenced by stocks (i.e. the inclusion of the S&P 500 as one of the leading indicators) and the pronounced “V”-shaped bounce coming directly on the back of such a dramatic period of decline appears suspicious.

Could we be headed into a second dip (similar to mid-1981) as the government’s Keynesian chicanery shows itself to have only propped demand but failed to encourage real “organic” demand?

Only time will tell…

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