Waiting for the Other Sheep To Drop… Or Not


Does anyone really know what’s going on?  Despite the gloom and doom of my recent posts (Waiting for the Other Sheep to Drop, Alphabet Soup:  What Shape will the Recovery Take?), the latest publication of the Conference Board’s Leading Economic Index (LEI) on Tuesday trumpets:  “Fifth Consecutive Increase!”  The LEI is supposed to predict economic activity approximately 6 months into the future, so you’d think that a five-month run would mean it’s time to celebrate, especially given what looks like the impressive bounce shown in this graph.

Picture 1

(The Coincident Economic Index — blue line — shows what’s happening to the economy currently, and — no surprise — it shows we’ve bottomed out.)

To be sure, The Conference Board hedges its bets and says that while a recovery is near, “the intensity and pattern of that recovery is more uncertain.” You can find the full report here.

Meanwhile, today’s WSJ headline reads“Rebound in Home Sales Hits a Bump” , with national sales declining last month after four straight months of increases. (Thank you, X-Man, for the heads-up on this article.)

What does all this mean?  I think it means two things.  1. The worst is over.  2.  You might just as well go consult your magic 8-ball (“signs point to yes,” “ask again later”…) as consult the experts on what the recovery will look like.

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