Monday, March 21, 2011

Growth Remains on Upswing

Investors have grown increasingly skittish in recent weeks, which is understandable given the enormity of recent events in the world. Lost amid all the concern regarding exogenous shocks seems to be that the U.S. economy remains on a solid growth trajectory. The latest evidence of this was found in the updates of two leading economic indicators released last week.

On Thursday, the Conference Board announced that their Leading Economic Index grew by 0.8% in February to a record high. The Diffusion Index, or the percentage of underlying components that are rising, increased to 80 from 55 in January.

On Friday, the Economic Cycle Research Institute’s Weekly Leading Index also showed continuing strength. The index’s annualized growth rate climbed to +7.1%, the highest reading since last May (shown below).

Despite short-term volatility that may linger for a bit, we believe these two measures confirm that the bull market is still well supported by an expanding economy.