A quick look at a timely topic of interest - with a brief review of why it could matter to investors.

Chart of the Week

November 30, 2015

US economy: high time for growth?
Leading Economic Index


Source: Bloomberg, as of 10/31/15. Past performance is no guarantee of future results.  Indexes are unmanaged, and not available for direct investment. Index returns do not include fees or sales charges. This information is provided for illustrative purposes only and does not reflect the performance of an actual investment.

The bottom line:

  • Will the US economy pick up speed in the months ahead, or lose steam in the face of cheap oil, soft growth and geopolitical uncertainty?
  • One positive signal-the healthy 0.6% rise in The Conference Board's Leading Economic Index (LEI) in October.
  • After stalling out during the three previous months, the index hit 124.1 in October-just one point below its previous high of 125.1, reached in March 2006.
  • On average the LEI has gained 0.16% per month over the past 35 years-a rate which, if achieved going forward, would push it beyond that previous high sometime in the first half of 2016.
  • If that did come to pass, it's interesting to consider what has happened the last three times that the LEI recaptured a previous high.
  • Following the deep recession of 1981-1982, the LEI surpassed its previous peak in November 1984...and the economy continued to expand for 68 months.
  • After that, the LEI surpassed its previous peak in December 1992…and the economy continued to expand for 99 months.
  • The LEI next surpassed its previous peak in January 2004...and the economy grew for another 47 months.
  • While it's true that the past is no guarantee of the future, the behavior of this index over the past 30 years does suggest that the current business cycle could still have a way to run before it fizzles out.

The chart:

  • The chart shows the index value (blue line) of the Leading Economic Index (LEI) from October 1980 – October 2015.
  • The green horizontal lines represent the period of time from a previous peak to the recovery of that peak following recessions.
  • The gray vertical bars represent recessions.


The Conference Board is a US-based business membership and research association.

The Conference Board's Leading Economic Index (LEI) is an American economic leading indicator intended to forecast future economic activity from the values of ten key variables.

The Federal Reserve Board ("Fed") is responsible for the formulation of U.S. policies designed to promote economic growth, full employment, stable prices, and a sustainable pattern of international trade and payments.



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Will China's official growth rate fall to 6 percent by the end of 2015?


Will China's official growth rate fall to 6 percent by the end of 2015?

Yes: Economic reform measures will take their toll on growth
Yes: Demographics and urban labor shortage will constrain demand
No: New monetary and fiscal stimulus will restore rapid growth
No: Recovery in the US, Europe and Japan will more than make up for slowing domestic demand

Previous month Poll

When will the Fed raise the Fed Funds target rate?

Not until 2016