The Conference Board Leading Economic Index rose 0.3 percent last month to a reading if 95.8, its highest level in four years. The index had declined 0.1 percent in April, the first decline in the Index in seven months.
The LEI is a measure of future economic activity. It is a composite of 10 components, including the unemployment rate, average hourly earnings and the average workweek hours from the Department of Labor’s Employment Situation report, the DOL’s weekly report on first-time jobless claims for state unemployment benefits, the U.S. Census Bureau’s monthly report on building permits, the S&P 500, and the University of Michigan Consumer Sentiment Index, which measures consumer expectations.
The Conference Board Coincident Economic Index, which measures the current state of the economy, increased 0.2 percent in May to 104.3, following a 0.2 percent increase in April. The Conference Board Lagging Economic Index increased 0.3 percent last month to 115.2 following a 0.6 percent increase in April.
The U.S. economy is “growing modestly,” Ken Goldstein, economist at The Conference Board, said in a statement. “The result is more of a muddle through. Continued headwinds both domestic and foreign, make further strengthening of the economy difficult.”
The LEI’s six-month growth rate, observed Ataman Ozyildirim, economist at The Conference Board, “remains in expansionary territory and well above its growth level at the end of 2011, pointing to a relatively low risk of a downturn in the second half of 2012.”
The release of the index comes one day after the Federal Reserve downgraded its 2012 economic growth forecast to no more than 2.4 percent. It also projected that unemployment, currently at 8.2 percent, will remain above 8 percent through2013,
Thursday’s jobless claims report found first-time claims for unemployment benefits dropped 2,000 from the previous week to a seasonally adjusted 387,000. Analysts consider 375,000 to be a benchmark for hiring strong enough to lower the unemployment rate.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.