Market Snapshot: Economic Indicators

Market Snapshot: Economic Indicators

According to the August Leading Economic Index (LEI) released last week by The Conference Board, the U.S. economy will be facing headwinds and slower economic growth ahead. The indicator, which fell by 0.2%, has been on a downward path for six consecutive months. The Coincident Economic Index (CEI), a measure of the current state of the economy, improved 0.3% in August, mostly driven by the industrial production component (other components include payroll employment, personal income less transfer payments, and manufacturing and trade sales).

Persistently weak consumer expectations of future business conditions and stock market volatility in early August have caused the LEI to decline and trigger a recession signal. On the next release, we can assess how the recent Fed rate cuts will impact this trend. In our industry, even though it’s still early, we might see some effects relatively quickly. Rate cuts might encourage developers to revisit certain investments. Construction starts may possibly increase soon as shelved projects make it out into planning and design. In addition, with increased demand for private investments, rate cuts could spur more M&A activity this year and next.

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