The Leading Economic Index (LEI) for the United States rose sharply in November again. It’s higher than it’s ever been since its inception in 1959.
The Conference Board forecasts real GDP growth to strengthen in Q4 2021 to an annualized rate of about 6.5%, before moderating to a still-healthy rate of 2.2% in Q1 2022. The November reading suggests the current economic expansion will continue into the first half of 2022, according to The Conference Board, an association for U.S. corporate giants.
The LEI has plunged before every recession in modern history except for the Covid recession, and a bear market was triggered by every recession in modern history except for the stock market crash of 1987, which makes the LEI a reliable forward-looking indicator of financial economics.
The 6.5% growth rate projected by The Conference Board’s economics team is higher than the Blue Chip Economic Indicators consensus forecast of 10 leading economists for about 6% growth in the fourth quarter of 2021.
The Standard & Poor’s 500 stock index closed Thursday at an all-time high of 4,725.79. The index gained +0.62% for the day and a whopping +2.25% from its closing price last Friday. The index is up +71.47% from the March 23, 2020, bear market low.
The Conference Board Leading Economic Index® (LEI) components: 1) average weekly hours worked, manufacturing; 2) average weekly initial unemployment claims; 3) manufacturers' new orders &- consumer goods and materials; 4) ISM index of new orders; 5) manufacturers' new orders, nondefense capital goods; 6) building permits – new private housing units; 7) stock prices, S&P 500; 8) Leading Credit Index™; 9) interest rate spread; 10-year Treasury minus fed funds; 10) index of consumer expectations.
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