Markets with Megan

Can a single index truly predict economic recessions? Join Megan as she answers this question in our latest episode. This month, the Leading Indicator Index has once again shown a negative trend, marking 27 out of the past 28 months. She unpacks the components behind this month's reading, such as declining ISM new orders, rising jobless claims, the infamous yield curve inversion, and waning consumer sentiment. Despite some positive signals from stock prices and building permits, the negative factors continue to dominate.

She also examines the skepticism surrounding this index's relevance as a recession indicator, particularly given its strong focus on goods in an economy where the service sector remains robust. Tune in as we explore the intricacies of this data and what it signals for our economic future. Don't miss out on this insightful discussion that will leave you better informed about the potential twists and turns in the economy. If you find our analysis valuable, be sure to share, like, and subscribe to Markets with Megan. For more episodes, visit our podcast page at verdece.com/podcasts. 

This is one of my favorite economic reports. It's the leading indicator index and it comes out once a month and we got that this morning. It is Thursday, july 18th, and the reason why I like this index is because it takes all of those leading indicators for the economic activity and bunches them all together and it gives you one basically index reading. This index has been negative on a month-over-month basis for 27 out of the past 28 months and typically when you have it this consistently negative, it also coincides with the recession. There's been some people, some economists, that aren't looking too much into this as being a pure recession indicator any longer, because it is more goods oriented instead of services, and we know that the service sector of the economy has been what's keeping us afloat. But let's dig into some of the data that came into this report and why it was negative.

So the biggest detractors from this, which kept the index negative, again from an ISM new orders, so that's goods orders. They're deeply negative. Jobless claims have started to tick up recently. So that's actually detracting from this index where it wasn't for a very long time. The interest rate spread we know that's the yield curve inversion. That's a negative. And then we've had weakness in consumer sentiment and that actually pulled this index negative. The positive contributions were stock prices and building permits. So those are the big ones that contributed positively to this index but, as we know, these other ones outweighed it and we've got another negative month from a leading indicator index. Not that surprising to us, because we do know that some of these things have been soft. That's all we have for today from an economic standpoint. If you like what you heard, please share the podcast like it. Follow us here at With Markets with Megan, and if you'd like to see additional podcasts, you can go to verdence. com/ podcasts. Thank you,