Article Link: https://www.usnews.com/news/economy/articles/2024-02-20/leading-economic-indicators-no-longer-forecasting-a-recession
This article focuses on the Conference Board's leading economic index. This index is otherwise known as the LEI and is published monthly and include factors such as consumer spending and business investment. For the first time in the past two years, 6/10 components of the LEI were positive.
Economists say this is a sign that we are in fact not heading towards recession; although, we will face a much slower GDP growth by the second quarter this year. I find this indicator interesting because it takes a broader look at the economy by combining many factors.
Another thing that stood out to me was this article is one of the only ones I have seen in a while to claim that we aren't heading into some type of economic turmoil or recession.
When working on our newsletter I found it quite hard to gauge what our 4 variables indicate for the entire economy. It's quite difficult to forecast the future based on only a few variables. The LEI seems to take into account many variables, which should result in a more accurate forecast. The index still can be incorrect though, as like any other model, it cannot take into account every variable in our economy.
ReplyDeleteWhat are the key insights provided by the Conference Board's leading economic index (LEI), and why is it significant in assessing the overall health of the economy? Additionally, how does the recent observation of positive trends in 6 out of 10 components of the LEI impact economists' predictions about the likelihood of recession, and what implications does this have for GDP growth in the coming months?
ReplyDeleteThis is great news overall, but interesting to hear considering that the consensus for quite some time is that we are due for a recession. I am curious as to what other factors are included in the LEI. What specific indicators make it so reliable in its forecast?
ReplyDeleteAlthough it is always hard to forecast what will happen in the economy, this is a good indicator we are staying away from a recession. My group included the LEI in our first newsletter, and it is good to see it is leaning more positive.
ReplyDeleteI found this index to be really interesting, especially how the pandemic influenced each component. I wanted to know why real GDP growth was expected to decline in the future, and I found that there is weaker growth in consumer spending and a decline in business investment. This could maybe be because of an expectation for inflation to decline in the future, so consumers and businesses hold off consumption/investment until a later date which can slow output.
ReplyDeleteThis is a good sign to see and the article was fairly interesting. I found stocks and mutual funds have been rising drastically, which is a good sign the economy is improving. I believe we are staying away from a recession with the direction we are going in.
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