April Business Conditions Monthly

By Robert Hughes

AIER's Leading Indicators Score a Perfect 100 in March

AIER's Business Cycle Conditions Leading Indicators index reached a perfect 100 reading in March after coming in at 92 in February. The March result is the first 100 since January 2014. The Roughly Coincident Indicators index also registered a perfect 100, returning to that level for a third time in the past five months. The Lagging Indicators index improved for a third month, posting an 83 after a 67 in February and a 58 in January (see chart below). The strong March results suggest ongoing expansion and a low probability of recession in the months ahead.

The broad range of economic data suggests very solid momentum for the economy. However, significant concerns linger. First, with positive activity in most areas in the economy, few new sources of growth remain. Second, and perhaps more important, is recent developments in public policy. Tariffs and a trade war, rising deficits and government funding needs, and the potential for more aggressive Fed policy are all potential risks to economic expansion. Careful monitoring of policy developments and current economic conditions is warranted.

Leading indicators point to economic expansion

All 12 of the AIER leading indicators are trending higher. It is the first time since January 2014 that every indicator is showing expansion. The index has been at or above 75 for 16 consecutive months and at or above the neutral 50 level for 98 of the past 103 months. The three-month average rose to 93.3, the highest reading since October 2013.

Just one indicator changed sign in March. The average workweek in manufacturing jumped from a negative trend for February to a positive trend in March. The latest data show the length of the average workweek in manufacturing surged to 42.2 hours, matching an all-time high. This

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AIER educates Americans on the value of personal freedom, free enterprise, property rights, limited government and sound money. Our ongoing scientific research demonstrates the importance of these principles in advancing peace, prosperity and human progress. www.aier.orgFounded in 1933, AIER is a donor-based non-profit economic research organization. We represent no fund, concentration of wealth, or other special interests, and no advertising is accepted in our publications. Financial support is provided by tax-deductible contributions, and by the earnings of our wholly owned investment advisory organization, American Investment Services, Inc. (http://www.americaninvestment.com/)

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