Leading Economic Index up 0.5%, but Sequestration Could Cut Growth
The Conference Board Leading Economic Index rose 0.5% in February, to 94.8, according to a Conference Board report (link opens a PDF) released today. Following a revised 0.5% bump for January, these newest numbers squeaked past market expectations of a 0.4% rise.
The Leading Economic Index attempts to identify economic turning points by aggregating a variety of individual indicators. It uses 2004 as a benchmark 100 score, and dropped as low as 78 in 2009, and as high as 108 in 2006.
February's report marks the third consecutive month of Index increases, and was boosted primarily by gains in financial components, building permits, and manufacturing workweek production. Lackluster results from new orders for non-defense capital goods and consumer expectations for business conditions kept any large economic expansion in check.
Although February's gains are optimistic, the Board warns that its most recent report hasn't yet incorporated government spending cuts. Economist Ken Goldstein notes: " The U.S. economy is growing slowly now, and with this reading increases hope that it may pick up some momentum in the second half of the year. However, this latest report does not yet capture the recent effects of sequestration, which could dampen the pickup in GDP."
The Federal Reserve released its most recent economic forecasts yesterday, which estimate GDP growth between 2.3% and 2.8% for 2013.
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