More interesting to us was that the detail of the report revealed that the gain was largely driven by three factors – the record-steep yield curve (shown as the “interest rate spread” on the table below), the recent increase in building permits, and the ongoing decline in initial jobless claims. This is significant, because when the LEI first began to turn higher in mid-2009, critics argued that it was entirely due to the financial components of the index (like stock prices and the money supply) while the economic components were dormant. So, it’s encouraging to see some of the economic factors joining the party.
No matter how you look at it, the LEI is sending a strong message that the economy is poised to continue to recover and grow for a least the next several months, if not longer.
