Is the economy headed toward recession? Ken Fisher says there is a reliable way to check: Just look at the Conference Board’s Leading Economic Index (LEI). Over the last 60 years, only two US recessions started without being preceded by a falling US LEI trend.
According to Ken, LEI can tell you whether the economy is more likely to grow or contract over the next six months or so. Ken suggests not getting too detailed when analyzing LEIs though—they are simply snapshots of key leading economic indicators.
To see LEIs, and their components, for the US and a dozen other developed countries, visit the Conference Board’s website. US LEI comprises 10 leading indicators, which include things like interest rate spreads, manufacturing indexes, initial unemployment claims and more. Of the 10 leading indicators in the US LEI, Ken Fisher says the best one is the stock market. If the stock market is doing OK, it’s already telling you the economy should be OK.
Ken Fisher recommends looking up LEIs the next time you hear a pundit warning of imminent economic doom. If LEI is high and rising, Ken says the economy should be fine. If it’s falling for an extended period, it could mean recession is near or already here.
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