| Definition:
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The Index of Leading Economic Indicators (LEI) is designed to forecast the direction (recession or expansion) of the economy 6-9 months in advance. The index is composed of the following 10 leading indicators: Average Workweek (manufacturing), Initial Unemployment Claims, New Orders for Consumer Goods, Vendor Performance (NAPM index), New Orders for Non-defense Capital Goods, Building Permits, S&P 500, Money Supply, Interest Rate Spread (10-year Treasury bonds less federal funds), Index of Consumer Expectations.
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| Meaning:
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The LEI has proven reliable for predicting recessions. Analysts look for three consecutive monthly declines in the index to indicate a possible recession. A couple of warnings though, it can give false signals and it may be difficult to determine exactly when a turn in the index will show up in the economy.
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| Weight:
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***
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| Source:
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The Conference Board
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| Availability:
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Report released the first few business days of the month, 4-5 weeks following the reference month
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| Frequency:
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Monthly
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| Coverage:
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2 Month Lag Factor (Data for June are released in July)
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| Volatility:
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Low
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Impact on the Markets:
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| Interest Rates:
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LEI  =
Interest Rates
LEI  = Interest Rates
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| Fixed-income:
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LEI =
Bond Market
LEI = Bond Market
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| Equities:
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LEI =
Stock Market
LEI = Stock Market
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| Dollar:
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LEI = Dollar
LEI = Dollar
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| More Information:
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U.S. Department of Commerce: Bureau of Economic Analysis
The Conference Board
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