Leading Indicators Point to Warm-Weather Recovery

Leading economic indicators for the United States experienced a jump in February, lending credence to arguments that sluggishness earlier in the winter was largely due to weather.

The Conference Board reported its Leading Economic Index (LEI) increased 0.5 percent last month to 99.8, inclining steeper after a 0.1 percent gain in January.

“The U.S. LEI increased sharply in February, suggesting that any weather-related volatility will be short lived and the economy should continue to improve into the second half of the year,” said Ataman Ozyildirim, economist at the Conference Board.

According to Ozyildirim, the strengths and weaknesses in the LEI were mostly balanced against each other in February, “with large increases in housing permits and the interest rate spread more than offsetting decreases in the workweek in manufacturing, consumer expectations and rising initial claims for unemployment insurance.”

The group also reported improvements in the Coincident Economic Index (CEI)—a measure of current conditions—to 108.2 and the Lagging Economic Index (LAG)—a measure of indicators that follow major economic changes—to 122.1, though those improvements were minor compared to headline index.

“While the CEI shows the pace of economic activity remained slow at the start of 2014, the trend in the LEI remains quite positive,” said Ken Goldstein, another economist for the Conference Board. “The biggest challenge continues to be weak consumer demand, pinned down by weak wage growth.

“These conditions were still in evidence the first two months of the year, but will likely improve as spring arrives.”