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CHART OF THE DAY: Leading indicator points toward economic reflation

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The Conference Board’s leading economic indicator continues to point toward a reflation of the economy from the shock of the pandemic. The board’s Leading Economic Index, released on Monday, showed a monthly gain of 0.5% in January to 110.3, continuing a string of increases.

We expect a 6.1% rate of growth in the American economy this year. But even with these gains, the leading indicator for the second month in a row reported a decline of 1.5% on a year-over-year basis, highlighting the magnitude of the pandemic’s economic shock last spring. That corresponds to January’s 1.8% year-over-year decline in industrial production.

But the bright spot in the report appears to be the recovery of the manufacturing sector.

Growth of nondefense new orders in inflation-adjusted terms — a forward-looking measurement — grew by 6.3% in January relative to January 2020, after growing by 6.5% during the last quarter of 2020. Still, the level of new orders in real terms remains lower than in 2013.

For more information on how the coronavirus pandemic is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.

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About Joseph Brusuelas

@JoeBrusuelas

Joe Brusuelas, “chief economist to the middle market,” is the preeminent voice championing issues and policies facing midsize companies in the United States and around the world. An award-winning economist, Brusuelas has more than 20 years’ experience analyzing U.S. monetary policy, labor markets, fiscal policy, international finance, economic indicators and the condition of the U.S. consumer.

A member of the Wall Street Journal’s forecasting panel and the UCLA Anderson School of Management's Board of Directors, Brusuelas regularly briefs members of Congress and other senior officials regarding the impacts of federal policy on the middle market and the factors by which middle market executives make business decisions. He also frequently offers his insights on the U.S., Canadian and global economies in the financial media. In 2020, he was named one of the 100 most influential economists by Richtopia. In December 2023, Brusuelas and the economics team were recognized on Bloomberg's list of Best Bond Forecasters after correctly predicting where the benchmark Treasury would end the year.

Before joining RSM in 2014, Brusuelas spent four years as a senior economist at Bloomberg L.P. and the Bloomberg Briefs newsletter group, where he co-founded the award-winning Bloomberg Economic Brief. Earlier in his career, he was a director at Moody's Analytics covering the U.S. and global economies for the Dismal Scientist website. He also served as chief economist at Merk Investments L.L.C. and chief U.S. economist at IDEAglobal.

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