May Leading Economic Indicators Preview
The May US Leading Economic Index is expected to be unchanged after a 0.1% increase in April. The 6-month annualized average for the LEI was down 2.3% in April, but better than the -3.4% reading in March and below the -4.5% recession threshold. The LEI was down 1.8% y-o-y in April.
The Coincident Index was unchanged in April and the Lagging Index gained 0.1%.
Potential Additions to the May LEI include:
* Widening of the 10yr-Fed Funds spread
* Gains in the S&P 500
Likely subtractions to the index include:
* Decreased M2 money supply
* Worst Michigan Consumer Confidence number since May-80
* Slightly higher Initial Jobless Claims
* Slowdown in Building Permits
* Lower ISM supplier deliveries
Since the formula to calculate LEI changes so frequently, it is better at at confirming past downturns than predicting future ones.