March 2011 Leading Indicators

The Index of Leading Economic Indicators (LEI) for March rose 0.4% suggesting economic growth will remain with us for the balance of 2011, although at such a low level it cannot really be expected to accelerate.  According to the Conference Board which publishes this report, consumer expectations took an upward turn toward the bright side, setting a positive tone.  Also in the plus column was slowing vendor deliveries which are taken to indicate an increase in orders manifesting as a supply backlog and therefore considered to be a good thing.

I’ll be the first to admit I am rarely characterized as ebullient, but the February LEI report did cause me to declare it was “good.”  An upward 0.2% revision in March, bringing February up to a full 1.0% gain only adds to what passes as euphoria.  Lest you take my tone as too positive, I hasten to add that most of the gain seen in this report remains driven by a yield curve still manipulated by the Fed’s drive to keep monetary stimulus available.  They don’t show any signs of changing that path anytime soon so this particular indicator will, in our opinion here at Atlas, continue to carry marginal value.  When Mr. Bernanke and Co. release the fetters, we’ll see how things play out on a more even field.