Current US LEI: 101 (N/A vs last year)
Jan 01, 2025
Ken Fisher, founder and Executive Chairman of Fisher Investments, has extensively discussed the Leading Economic Index (LEI) and its significance in forecasting economic trends. Fisher has emphasized that the LEI has a strong track record in signaling economic downturns. He noted that between 1959 and 2020, only two U.S. recessions began without being preceded by a declining LEI trend. The U.S. LEI comprises ten components, including the S&P 500 Index, interest rate spreads, manufacturing new orders, and initial unemployment claims. Fisher pointed out that these indicators collectively provide a snapshot of future economic activity.
According to Fisher, a falling LEI trend typically indicates a recession may be imminent, while a rising LEI suggests economic expansion. He advises investors to monitor the LEI to gauge the economy's direction over the next six months. The absolute value of the LEI is less important than its recent trend.
In more recent discussions, Fisher has noted that widely known indicators like the LEI may not be as predictive as they once were because markets tend to pre-price widely known information. He suggests that investors should pay attention to less-discussed indicators, which typically have greater surprise power.
According to Fisher, a falling LEI trend typically indicates a recession may be imminent, while a rising LEI suggests economic expansion. He advises investors to monitor the LEI to gauge the economy's direction over the next six months. The absolute value of the LEI is less important than its recent trend.
In more recent discussions, Fisher has noted that widely known indicators like the LEI may not be as predictive as they once were because markets tend to pre-price widely known information. He suggests that investors should pay attention to less-discussed indicators, which typically have greater surprise power.
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Source:
- Conference Board