Thursday, April 19, 2012

Leading Economic Indicators (less Fed Control) Negative

Excluding the components the Fed impacts, the index is negative for the second time in three months, dragged down by the decline in the average work week.


  1. I love this graph - seeing the Fed effect (which is valid obviously and is a real effect, suspect or not) and the ex-Fed level is illuminating. I'd love to see an overlay with S&P, or GDP, and the time series extended to the beginning of the extraordinary Fed actions (2008?). That may be a bit cluttered and I may not even like what I'm asking for but it seems interesting.

    And I know, readers always askin' for more stuff. But it's just because these economic pictures are so darn good looking, always want more ;-). Happy Friday

  2. Mike's right, these are good pictures. Don't know how you manage to dig them up, but they are good. Clearly, the economy may have stalled out. QE3??

  3. @agriculture investments - re: "clearly the economy has stalled out" - on the contrary! The only thing this shows is that clearly the Fed has an enormous influence. I mean, ex-Fed the economy has stalled out, but the Fed is our reality, and so long as with the fed the LEI are positive, that's growth. With inflation low (economic repression from the Fed) it isn't a hard hurdle to meet to have not only nominal growth (which the LEI shows clearly) but real growth (LEI-implied growth adjusted for inflation). We're growing, if slowly - and whether it's long-term healthy or not it's the Fed providing the juice apparently. That's what's so great about this graph as it makes that so visible

  4. Mike- thanks for the complement.

    The S&P levels can be proxied by the green bar (stock prices).

    GDP is a tougher situation as it is only reported quarterly and really hasn't reflected LEI well at all... 1.8% growth in Q3 after a lower 0.4% in Q2.

    Finally... a longer time series becomes (almost) impossible because the LEI is now made up of different components (the change was made in January). Details here: