Economy Watch: Robust Economic Growth Ahead in First Half of 2018

Strong leading economic indicators and consumer confidence bode well for the U.S. economy this year, according to The Conference Board's recent reports.
Source: The Conference Board Leading Economic Index® (LEI) for the U.S., January 2018
Source: The Conference Board Leading Economic Index® (LEI) for the U.S., January 2018

The Conference Board reported on Friday that its Leading Economic Index for the U.S. increased 1 percent in January to 108.1 (2016 = 100), following a 0.6 percent increase in December and a 0.4 percent increase in November. That, according to Ataman Ozyildirim, director of business cycles and growth research at the Conference Board, points to robust economic growth for the first half of 2018.

Moreover, he noted, while the recent stock market volatility won’t be reflected in the index until next month, consumer and business outlooks on the economy had been improving for several months and shouldn’t be greatly affected.

“The leading indicators reflect an economy with widespread strengths coming from financial conditions, manufacturing, residential construction and labor markets,” Ozyildirim said.

Among the components of the Conference Board Leading Economic Index are average weekly hours in manufacturing, initial claims for unemployment insurance, manufactures’ new orders, building permits, stock prices and the interest rate spread on 10-year U.S. Treasuries.

Consumers Confident

Consumers seem to be on board with that kind of optimism about the economy. Late in January, the Conference Board reported that its Consumer Confidence Index increased for the month, following a decline in December. The Index now stands at 125.4 (1985 = 100), up from 123.1 in December. The Present Situation Index decreased slightly, from 156.5 to 155.3, while the Expectations Index increased from 100.8 in December to 105.5 in January.

“Consumers’ assessment of current conditions decreased slightly, but remains at historically strong levels,” said Lynn Franco, director of economic indicators at the Conference Board. “Expectations improved, though consumers were somewhat ambivalent about their income prospects over the coming months. Overall, however, consumers remain quite confident that the solid pace of growth seen in late 2017 will continue into 2018.”

The monthly Consumer Confidence Survey, based on a probability-design random sample, is conducted for the Conference Board by Nielsen, a provider of information and analytics about what consumers buy and watch.