Even with an expanding economy in November the United States appears to be slowing even more as November was the worst on record yet for new coronavirus cases and the effects of that just keep rippling through the system. A measure that consolidates multiple measures to show total growth was at its lowest number since June when the recovery really started to begin called the Leading Economic Index.
The measure of the Leading Economic Index in November was an increase of 0.6%, down from 0.8% in October and 0.7% in September these results are still better than many on Wall Street had forecasted. The Leading Economic Index was pushed by a higher decline in jobless claims, an increase in manufacturing orders, and the continued solidity of the stock market.
Not all news is good, however as jobless claims have come back to rear their ugly head in December and many other segments of the economy have either lost strength or declined on their own. These changes in the market situation could see the index go negative in December for the first time since May. There are 10 indicators on the Leading Economic Index that are designed to signal the rises and falls of the business cycle.
The 10 indicators are the average weekly manufacturing hours, average weekly initial unemployment claims, manufacturers new orders of consumer goods, ISM index of new orders, manufacturer new orders of capital goods, building permits for private housing, stock prices, the leading credit index, the interest rate spread from 10-year Treasury bonds less federal funds, and consumer expectations.
With the United States being crippled by another massive increase in coronavirus cases many municipalities and whole states have reimposed restrictions on business in a manner that is meant to curb opportunities for catching the virus, even as the first vaccines are starting to arrive to those in the first priority group. As vaccine availability improves we could see these restrictions go away more so in the spring but the next couple months may be very rough for many sectors as officials are trying to keep people safe.
The senior director of economic research on The Conference Board, which is the group responsible for the Leading Economic Index made a statement that, “The U.S. LEI continued rising in November, but its pace of improvement has been decelerating in recent months, suggesting a significant moderation in growth as the U.S. economy heads into 2021.”