Economy Still Growing Above Historic Average

The Conference Board reported that its Leading Economic Index was up in March by 0.8 percent. And the Chicago Fed National Activity Index's reading in March suggests economic expansion is still above historical trends.

Is the economic sluggishness that seemed to grip the nation (according to some indicators but not others) going away now that spring has more-or-less come to most places after the hard winter? Put one more indicator on the positive side of that question: the Conference Board reported on Monday that its Leading Economic Index (LEI) was up in March (and its Coincident and Lagging Indexes were up, too).

The LEI increased 0.8 percent in March to 100.9 (2004 = 100 for all the indexes), following a 0.5 percent increase in February, and a 0.2 percent increase in January. The Coincident Economic Index increased 0.2 percent in March to 108.3, and the Lagging Economic Index increased 0.6 percent to 123.0.

“After a winter pause, the leading indicators are gaining momentum and economic growth is gaining traction,” Conference Board economist Ataman Ozyildirim noted in a statement. “While the improvements were broad-based, labor market indicators and the interest rate spread largely drove the March increase, offsetting the negative contribution from building permits. And, for the first time in many months, the consumer outlook is much less negative.”

Chicago Fed: Economy Still Growing Above Historic Average 

The Chicago Fed National Activity Index (CFNAI) dropped to +0.20 in March from +0.53 in February, according to the Federal Reserve Bank of Chicago on Monday. That reading suggests economic expansion is still above historical trends in March, but not as much as in February. Two of the four broad categories of indicators that make up the index made positive contributions to the index in March, namely the production- and employment-related indicators, but two of the four categories decreased, namely housing- and consumption-related indicators.

The index’s three-month moving average, which the central bank calls CFNAI-MA3, increased to a neutral reading in March from –0.14 in February, marking its third consecutive nonpositive value (but at least it isn’t negative). What that means is that in March the U.S. economy grew at its historical trend. The economic growth reflected by the CFNAI-MA3 also suggests there won’t be much inflation over the coming year.

The CFNAI includes 85 economic indicators in the aforementioned four broad categories of data, with each measuring some aspect of overall macroeconomic activity. The index provides a single summary measurement of the data. On the whole, the CFNAI has hovered around 0.0 since the worst of the recession was over. At the pit of the recession in early 2009, it got as low as –4.0.

Wall Street had a modest up day on Monday, with the Dow Jones Industrial Average gaining 40.71 points, or 0.25 percent. The S&P 500 advanced 0.38 percent and the Nasdaq was up 0.64 percent.