Signals from the Latest Economic Indicator Trends | Episode 123 | 04-18-2024

In this episode, Megan examines the recent decline in the leading economic indicator index for March, which may be signaling a recession. This index has pointed to negative growth in 24 out of the last 25 months, a pattern that has often preceded economic downturns in the past.

Megan explores the various factors contributing to this trend, such as a decrease in building permits and a slowdown in orders for non-defense capital goods. Despite these concerns, consumer spending has remained strong, providing some support to the economy.

Although the economic outlook appears challenging, the stock market and leading credit index show some positive signs.

We thought we were making some progress here on the leading economic indicator index, but unfortunately, in March we saw that reverse course. I'm Megan Horniman, the Chief Investment Officer for Verdence Capital Advisors. We're coming to you today it's Thursday, april 18th with our regular segment of Markets with Megan, and we got a couple of pieces of economic data today that are worth mentioning. So we'll do a part one with the leading economic indicators and then we'll come back. Stay tuned there for part two, where we talk about existing home sales. So let's break down the leading economic indicator index. I really like looking at this index because it compiles all of these different areas of the economy. It looks at the labor market, it looks at manufacturing, it looks at orders, it looks at the stock market, the credit market, and it looks at interest rate spreads and then also housing, and what we saw was we did get an increase in this index last month. That was the first time we've seen this in more than two years. In fact, it actually reversed course. It was negative again in March, so it's been negative in 24 out of the past 25 months. Unfortunately we've talked about this before this has never happened where we've had a duration of this long, with the leading indicators negative, and we haven't had a recession.

Let's break into some of the different areas that we recognized in this report. First of all, the weakness was led by you had building permits. That was the worst we've seen in six months. The interest rate spread, which is the yield curve. That was also negative. Consumer expectations have rolled over. They've been negative. We also saw negative in jobless claims, as well as the ISM new orders Some of the weaker ones the non-defense capital goods orders.

They go straight into GDP. That was only up 0.01%. The biggest positives in this report, though, were the stock market and the leading credit index. Both of those are keeping this somewhat muted at a negative pace, but these are the things that we think can turn over very quickly, so we're watching this closely Again. This doesn't really bode well for the economy, but it's been negative for a very long time and consumers have held in to support this economy. That's all we have for today's. Please tune in for part two when we discuss the existing home sales. Thank you, and if you have any questions or comments, please feel free to reach out to podcast at verdence dot com. Thank you.