March 2021 Leading Economic Index Rose Sharply

Econintersect has published correlations of the new LEI to past recessions. At first glance, this index provides a recession warning.

The fly-in-the-ointment is that this analysis is that the above graph is not a real-time analysis. Consider that the LEI is not final when first issued - it is subject to revision for months. From The Conference Board:

To address the problem of lags in available data, those leading, coincident and lagging indicators that are not available at the time of publication are estimated using statistical imputation. An autoregressive model is used to estimate each unavailable component. The resulting indexes are therefore constructed using real and estimated data, and will be revised as the unavailable data during the time of publication become available. Such revisions are part of the monthly data revisions, now a regular part of the U.S. Business Cycle Indicators program.

The data does not exist to establish what The Conference Board's LEI values would have been in real-time - at this point, only the final numbers are known. Unfortunately, knowing the current values is no assurance that a recession is or is not imminent as there is no track record of real-time performance.

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