Economists surveyed by Bloomberg News had expected the index to decrease 0.1% in April 2008. The index increased 0.1% in March 2008 after declining for five straight months.
Four of the 10 ten indicators that comprise the leading index have increased in the past six months. In April 2008, six of 10 increased: stock prices, interest-rate spreads, building permits, jobless claims, vendor performance, and consumer-goods orders. Consumer expectations, factory work hours, and orders for capital goods declined. Money supply was unchanged.
A mild U.S. recession?
Economist Glen Langan told BloggingStocks Monday the April 2008 LEI information is another datapoint, albeit a modest one, pointing to a mild U.S. recession.
"The LEI data doesn't indicate accelerating growth, but it certainly doesn't indicate the U.S. economy is deteriorating massively, either. It's another datapoint that we kind of have to sift through category-by-category to get more clues on any pickup in commercial activity," Langan said. "Right now the economy appears to be growing at the lowest of rates as it works through the housing slump."
Langan added that "the data is pointing to a mild recession, at worst, but keep in mind the economic horizon can deteriorate quickly, if we get more bad news on investment bank losses or credit market stress."
The leading index now stands at 102.0 (base year is 2004 = 100). The index of leading economics indicators is designed to forecast turning points in the economy -- recessions and recoveries -- but its predictive capacity is not fail-safe. With the aforementioned in mind, economists and analysts note that the index has a better track record predicting the general direction of the economy over the next 3-6 months.
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