Overview of US Economic Indicators
In November 2024, the Conference Board Leading Economic Index® (LEI) for the United States reported a 0.3% increase, bringing the index to a score of 99.7 (using 2016 as a baseline, which equals 100). This rise marks a crucial recovery, almost fully offsetting the 0.4% decrease observed in October. These figures provide a fresh perspective on the dynamics of the U.S. economy, especially as leaders and analysts look for signs indicating future trends.
Historical Context
Notably, this shift in the LEI comes after a challenging period, where the index experienced a decline of 1.6% over the six months from May to November 2024. Although this decline is slightly less severe than the 1.9% downturn recorded during the previous six-month span ending in May 2024, the data signals a potential turnaround for economic conditions in the coming months. Justyna Zabinska-La Monica, a Senior Manager at The Conference Board, commented that this increase represents the first upward movement since February 2022, highlighting the significance of this statistical change.
Key Contributors to Growth
The growth in the LEI was driven by several positive developments:
- - An increase in building permits, particularly in the Northeast and Midwest regions, with a focus on multi-family units rather than single-family homes.
- - Continuous support from equity markets.
- - An uptick in average hours worked within the manufacturing industry.
- - A decrease in initial unemployment claims.
These factors collectively contributed to an overall brighter outlook for the residential construction sector, which is pivotal for sustained economic growth. However, it's crucial to note that while building permits saw an improvement, the gains were not extensive across various locations or types of construction.
Coincident Economic Index Insights
Alongside the LEI, the Coincident Economic Index® (CEI) for the US also saw a slight improvement, rising by 0.1% to 113.0 in November 2024. This growth aligns with the steady rates observed from July to October of the same year, marking a total increase of 0.6% over the similar six-month period. The CEI, which includes critical indicators like payroll employment and personal income (excluding transfer payments), indicated that personal income has been a significant contributor, followed by payroll employment and manufacturing sales.
While the CEI's resilience signifies stable current economic conditions, the continuing decline in industrial production remains a concern that needs to be addressed.
Lagging Economic Index Movement
Additionally, the Lagging Economic Index® (LAG) increased by 0.3% to 118.8 in November, following a minor decline in October. Although the LAG's data points indicate a modest rebound, its six-month growth rate showcased a decline of 0.4%, reflecting the complexities of current economic trends.
Future Economic Forecast
Looking ahead, predictions from The Conference Board suggest that the US GDP is expected to expand by 2.7% in 2024, albeit with a projected slowdown to 2.0% in 2025. These forecasts emphasize the volatility and unpredictability of economic landscapes. As we navigate through these changes, monitoring the LEI and CEI will be critical for understanding the underlying economic cycle and gauging future growth prospects.
Conclusion
The latest economic data from The Conference Board serves as both a warning sign and a beacon of hope for stakeholders in various sectors. With significant factors influencing the LEI's rise, it's essential for policymakers, businesses, and investors to remain vigilant and responsive to these trends. The next release of these economic indexes is scheduled for January 22, 2025, providing another opportunity to assess and analyze the direction of the U.S. economy amidst evolving challenges.