The leading economic indicators (LEI) are part of this picture, but this quiz will help you see the forest for trees. Just like this picture of change, the economic picture is always changing right in front of us, making it hard to see even the most obvious trends unfolding in front of us.
To be clear, the picture includes the trendline of two decades of monthly LEI data, a period encompassing the decade-long expansion already in progress, plus the two preceding expansions and recessions. Can you see the hidden trend?
Here's what you're looking for: the index of leading economic indicators. The LEI declined slightly in October after going nowhere for five months. The sideways LEI fueled a new round of frightening stories in the media. To be clear, focusing on the past six months of sideways action in the LEI index literally misses the big picture in this HiddenomicsTM challenge. The LEI collapsed months before every recession for many decades, earning a reputation as a reliable leading indicator of a recession. Such a collapse is not happening now.
In addition, the six months of going sideways followed three years of record high LEI readings.
Put in proper perspective, despite six months of going nowhere, the LEI currently remains near its all-time record-high.
This article was written by a veteran financial journalist. While these are sources we believe to be reliable, the information is not intended to be used as financial or tax advice without consulting a professional about your personal situation. Tax laws are subject to change. Indices are unmanaged and not available for direct investment. Investments with higher return potential carry greater risk for loss. No one can predict the future of the stock market or any investment, and past performance is never a guarantee of your future results. |