Economy Watch: Negative Signals for the Economy

The Conference Board Leading Economic Index® (LEI) Source: The Conference Board

On Thursday, a number of new datapoints painted a somewhat negative picture for the U.S. economy as it approaches the fourth quarter. For one, the Conference Board’s Leading Economic Index declined 0.2 percent in August to 124.1 (2010 = 100), following a 0.5 percent increase in July, and a 0.2 percent increase in June.

“Although strengths and weaknesses among the leading indicators are roughly balanced, positive contributions from the financial indicators were more than offset by weakening of nonfinancial indicators, such as leading indicators of labor markets, suggesting some risks to growth persist,” noted Ataman Ozyildirim, director of business cycles and growth research at the organization.

Also on Thursday, the Chicago Fed reported that its Chicago Fed National Activity Index fell to -0.55 in August, compared with +0.24 in July. All four of the broad indicator categories that make up the index dropped for the month—production and income; employment; personal consumption and housing; and sales, orders and inventories—each making a negative contribution to the overall index. The three month moving average, however, ticked up from -0.09 in July to -0.07 in August.

One more negative datapoint for the day: existing home sales dropped more than expected. The National Association of Realtors estimated that existing home sales were at an annualized rate of 5.33 million, down 0.9 percent from July, but up 0.8 percent from last August. Factors in the monthly drop: prices are still rising and inventory in a lot of markets is tight.