Line chart overlays Leading Economic Index and U.S. recessions.
Y-axis: YoY change (%), x-axis: 1960 – 2021
LEI declines before 8 recessions shown: 1960, 1970, 1973, 1980, 1981, 1990, 2001, 2008, and 2020:
- 1960: From near 5% to about 1% year-over-year change
- 1970: From above 5% to below 0%
- 1973: From above 10% to below 0%
- 1980: From above 0% to less than -5%
- 1981: From near 0% to about -5%
- 1990: From less than 5% to less than 0%
- 2001: From less than 5% to less than -5%
- 2008: From about 10% to less than -5%
- 2020: From about 5% to less than 1%
In early 2020, change was at 0.7%, but by late April it was at more than -13%. By year-end 2020 change had moderated to near -2.2% and by the end of May 2021 had changed to a positive 14.7%, and by late August had moderated to 10%.
Sources: Bloomberg, FactSet, and Wells Fargo Investment Institute. Monthly data from January 1, 1960 to August 31, 2021. The Conference Board Leading Economic Index® (LEI) is a composite average of 10 leading indicators in the U.S. It is one of the key elements in the Conference Board’s analytic system, which is designed to signal peaks and troughs in the business cycle. The ISM Manufacturing Index® is a composite index based on five indicators with equal weight. Long-term trend = current versus 12-month moving average. The S&P 500 Index is a market-capitalization-weighted index considered representative of the U.S. stock market. An index is unmanaged and not available for direct investment. Stocks may fluctuate in response to general economic and market conditions, the prospects of individual companies, and industry sectors.
- Solid, broad-based improvement in the leading economic indicators through July signaled strong economic growth beyond the latest wave of the pandemic.
- The steady-to-higher ratio of coincident to lagging indicators, often foreshadowing moves in the leading index, also points toward strengthening growth.