December 2018 Leading Economic Index Marginally Declined But Data Affected By Government Shutdown

The Conference Board Leading Economic Index (LEI) for the U.S marginally declined this month - and the authors say "While the effects of the government shutdown are not yet reflected here, the LEI suggests that the economy could decelerate towards 2 percent growth by the end of 2019".

Analyst Opinion of the Leading Economic Index

Because of the significant backward revisions, I current data cannot be trusted. And this month, there are even bigger caveats. From the Conference Board:

Please note that due to the government shutdown, data for manufacturers' new orders for consumer goods and materials for November and December and building permits were not published for December. The Conference Board has forecasted these series in order to publish a preliminary Leading Economic Index. Data for manufacturers' new orders for nondefense capital goods excluding aircraft for November are from the advance report for Manufacturers' Shipments, Inventories & Orders. In addition, The Conference Board is postponing the regularly scheduled annual benchmark revision of the composite indicators until all underlying data are available.

This index is designed to forecast the economy six months in advance. The market (from Econoday) expected this index's month-over-month change at -0.2 % to 0.2 % (consensus -0.1 %) versus the -0.1 % reported.

ECRI's Weekly Leading Index (WLI) is forecasting a slight contraction over the next six months.

Additional comments from the economists at The Conference Board add context to the index's behavior.

The Conference Board Leading Economic Index® (LEI)for theU.S. declined 0.1 percent in December to 111.7 (2016 = 100), following a 0.2 percent increase in November, and a 0.3 percent decline in October.

"The US LEI declined slightly in December and the recent moderation in the LEI suggests that the US economic growth rate may slow down this year," said Ataman Ozyildirim, Director of Economic Research at The Conference Board. "While the effects of the government shutdown are not yet reflected here, the LEI suggests that the economy could decelerate towards 2 percent growth by the end of 2019."

The Conference Board Coincident Economic Index® (CEI) for the U.S. increased 0.2 percent in December to 105.1 (2016 = 100), following a 0.2 percent increase in November, and a 0.2 percent increase in October.

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