US Leading-to-Coincident Indicator Ratio Falls to 0.84, Matching 2008 Low

The ratio of U.S. leading to coincident economic indicators has fallen to 0.84, matching the low recorded during the 2008 financial crisis, according to a report from @KobeissiLetter. This development comes after the Leading Economic Index (LEI) decreased by 0.6% month-over-month in March, marking its seventh decline in the past eight months.

The LEI tracks forward-looking data such as consumer expectations, manufacturing orders, weekly hours worked, and initial jobless claims. At the same time, the Coincident Economic Index (CEI) measures current economic conditions through metrics like nonfarm payrolls and personal income, excluding government social security or unemployment payments.

The report highlighted that the ratio is on track for its fifth consecutive annual decline, which would be the longest such streak on record. Historically, levels this low have only occurred during recessions.

The report from @KobeissiLetter noted that the U.S. economy and the stock market appear to be moving in opposite directions based on these indicators. Leading indicators suggest potential future weakness, while coincident indicators reflect the present state.

Observers monitor these metrics to gauge overall economic health and anticipate shifts. The Conference Board compiles both the LEI and CEI to provide insights into economic trends. The current ratio's decline follows a pattern of mostly negative monthly changes in the LEI over recent periods.

This data is used by economists to assess risks of economic downturns.