Leading Economic Index

I have often spoken in praise of the leading economic index for having the chutzpah to unabashedly predict the course of the U.S. economy.

Amid the gloom these days, the LEI is consistent source of happy talk, as in today's release.

But how good is it at predicting the course of the economy? Critics say, Not so good.

The Conference Board, which runs the index, in February released its own study of how the LEI did during the recent recession, accompanied by a report on how another predictor, the less widely followed M2, performed.

The reports focus on how the LEI did in predicting the onset of the recession. We now know that it bottomed in June 2009, so the question going forward is how well did it predict the resumption of growth, and more important, how well will it predict the onset of a second dip, should it in fact occur.

Anyhow, good reading, and more fun than tarot cards and astrology.