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First Cut: March Leading Economic Index posts its largest one-month drop on record

The Conference Board’s Leading Economic Index plunged 6.9% in March to 104.2, the lowest since 104.2 in August 2017. The Conference Board said it was the largest one-month decline in the series’ 60-year history. However, the drop was in line with market expectations and should not excite increased gloominess about the economic outlook. That was already pretty well in place. I note there were substantial downward revisions to the prior two months. Overall, this report affirms that the US economy was growing only modestly in the first two months of the first quarter and took a heavy blow in the third month.

The composition of the drop was much as anticipated. The massive increase in initial jobless claims and the weakness in the stock market were the main causes. Five of 10 components were negative contributors, one was neutral, and three were positive. The small size means none of the positives could be said to have made much of an offset to the negatives.

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