Leading Economic Indicators
The Leading Economic Index dropped 0.5% in September following a 0.3% decline in August.
LEADING ECONOMIC INDICATORS | SEPTEMBER 2024
The Conference Board Leading Economic Index® (LEI) decreased by 0.5% in September 2024, following a 0.3% decline in August. During the six-month period from March to September, the LEI contracted by 2.6%, slightly worse than the 2.2% decline during the prior six-month period. “Overall, the LEI continued to signal uncertainty for economic activity ahead and is consistent with The Conference Board expectation for moderate growth at the close of 2024 and into early 2025” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board.
Real GDP growth projections for the third quarter of 2024 continue to look good with the Atlanta Fed's GDPNow model estimating 3.3% real GDP growth, while the New York Fed's Nowcast predicts 2.9% GDP growth.
Source: The Conference Board
Source: The Conference Board
The Coincident Economic Index® (CEI), which gauges present economic conditions, increased by 0.1% in September, following a 0.2% increase in August. During the six month period from March through September 2024, the CEI rose 0.9%, a bit higher than the 0.5% growth rate observed in the previous six months. Three of the four CEI components rose in September.
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The Federal Open Market Committee (FOMC) meets on November 6th and 7th, immediately following the November 5th election. The latest CME FedWatch Tool indicates a 95% probability of a 25 basis point rate cut, which would lower the fed funds target to a range of 4.5% to 4.75%.
According to Factset, the third quarter earnings reports have been mixed. “On a year-over-year basis, the index is reporting earnings growth for the fifth-straight quarter. However, the S&P 500 is also reporting its lowest (year-over-year) earnings growth rate since Q2 2023 (-4.2%).”
In case you missed it, we posted our favorite money market and CD rates last week. The 3.72% yield in VMSXX remains very attractive, especially for investors in higher federal income tax brackets. For investors in the top 37% federal bracket, VMSXX offers a tax-equivalent yield of 5.9%.
Our November Model Portfolio Update is scheduled to be published next week on Friday November 1st. Our October update is available here.