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First Cut: February Leading Economic Index blunted by soft new orders, decline in building permits

The Conference Board’s Leading Economic Index was up a scant 0.1% in February from January, while the January reading was revised to up 0.8% (previously up 0.7%). It might be tempting to attribute the softness to the early stages of the spread of COVID-19. In reality, if reflected ongoing weakness in orders for hard goods other than defense, and a roll back in building permits levels from a near-term peak in January that was exceptional.

As of this writing, the February index is largely irrelevant as a signal of future activity. The March report is probably going to reflect a severe upswing in jobless claims, a drop in new orders for all sorts of hard goods outside of medical supplies, the plunge in the stock market and rocky credit conditions, and a drop in consumers’ expectations for the future.

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