Is the U.S. economy and bull market in danger of rolling over? There are many opinions and forecasts on this matter, but the best way to objectively answer this question is by closely tracking a wide range of leading economic indicators (LEIs). Take, for example, the Conference Board’s Leading Economic Index, which often provides a valuable signal for major market peaks, economic recessions, and bear markets. According to Conference Board data, the trend for the U.S. economy is still positive and not yet in danger of rolling over.
Source: Doug Short
We also follow a wide handful of other leading economic indicators and compile them into an index that shows the percentage that are increasing or decreasing each month. This is helpful since it eliminates some of the distortions caused by certain regions or, looked at from another way, can tell if weakness is spilling over and signaling widespread economic contraction. Heading into the last quarter of 2014, 100% of the LEIs we follow were in growth territory. As of December 2014 (the most recent data point), 94% are still positive and do not show an economy in danger of rolling over (Note: recession marked in red).
To learn more about the LEIs as well as our Big Picture outlook for the market, please consider our most recent broadcast, "The State of the Union."