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The State Of The Short Leading Indicators

New Deal Democrat profile picture
New Deal Democrat


  • With the long leading indicators having turned decisively negative almost a year ago, whether the short leading indicators are also turning negative becomes crucial.
  • This article examines 10 short leading indicators with extensive histories.
  • Their overall status as of now remains slightly positive, although it would not take much to flip several more negative.


Last week when I wrote that substantial backward revisions to adjusted corporate profits had intensified concern about the short-term forecast, I mentioned that I wanted to update two things: (1) how the producer side of the economy would have to play out, and (2) the short leading indicators.

The first part I posted earlier this week. Today I am examining the second part.

The eleven short leading indicators

In his 1993 tome, Prof. Geoffrey Moore listed a series of 11 short leading indicators. These are more variable but typically turn a few months before the economy as a whole. Moore identified them as: S&P 500 stock price index, Average workweek in manufacturing, Layoff rate under 5 weeks, Initial claims for unemployment insurance, ISM manufacturing vendor performance, ISM manufacturing inventory change, Journal of Commerce change in commodity prices, Change in deflated nonfinancial debt, New orders for consumer goods and materials, Dun and Bradstreet change in business population, Contracts and orders for plant and equipment. Aside from the Dun and Bradstreet data, all of the rest of the series are publicly available. I would expect most of these to turn negative at least a few months before the outset of any recession. Let’s examine each in turn:

S&P 500 stock price index

While stock prices are off of their recent highs, they remain in a slightly upwardly sloping trendline dating back almost 24 months:

I would expect stocks to at least make a new three-month low before the onset of a recession. They haven’t.

Average workweek in manufacturing

I have written about this series a number of times in recent months. Hours are down -0.9 from their peak last year:

In the past this has almost always preceded a recession. This is a negative.

Layoff rate under 5 weeks, Initial claims for

This article was written by

New Deal Democrat profile picture
New Deal democrat As a professional who started an individual investor for almost 30 yeas ago, I quickly focused on economic cycles and the order in which they typically proceed. I have been writing about the economy for nearly 15 of those years, developing several alternate systems that include mid-cycle, long leading, short leading, coincident, lagging and long lagging indicators. I also focus particularly on their effects on average working and middle class Americans.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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