The Conference Board January 2023 Press Release Indicates US and China LEI Decline and Possible Recession

The Leading Indicators Reports (LEI reports) by the Conference Board are hinting at recession in 2023. I'm not so sure but let us see what happens. A small dip won't be a recession but how the year finishes is important. Similar to them I project the 2023/24 interchange is likely to show strength (Perhaps digital economy growth heavy. I don't really like how the Fed defines digital economy as I think it can be limiting to the overall meaning. I might think of a metric for a broad calculation to show how much of the economy has now shifted to root digital transactions versus physical transactions. I bet we would find higher growth with digital transactions but that the calculation is using physical assumptions. It wouldn't seem like it would make a difference but a wrong assumption can make it through the chain and impact our choices. The animal spirits can have a mind of their own! Grrrrr!!!) 

My reasoning is likely different then theirs as I'm thinking about the ability of the market to accept digital shifts and adjustments since being pushed from the business necessities of COVID. Furthermore, I think the year might not be as bad as initially projected (Its just a thumb in wind assessment). Let us just watch and find out. 

There are a lot of factors involved and dashboards are excellent (They do come with some risks of missing information and data because of overuse. Always balance out your info and reading. I'm not saying that is the case, but I'm saying we often think about things from a similar academic lens. Its more general concept when it comes to dashboards. The researchers that put these ones together are very knowledgeable people.) Its nice to see the economy grow as we will need to be much more competitive going forward.

US LEI Decline
“The US LEI fell sharply again in December—continuing to signal recession for the US economy in the near term,” said Ataman Ozyildirim, Senior Director, Economics, at The Conference Board. “There was widespread weakness among leading indicators in December, indicating deteriorating conditions for labor markets, manufacturing, housing construction, and financial markets in the months ahead. Meanwhile, the coincident economic index (CEI) has not weakened in the same fashion as the LEI because labor market related indicators (employment and personal income) remain robust. Nonetheless, industrial production— also a component of the CEI—fell for the third straight month. Overall economic activity is likely to turn negative in the coming quarters before picking up again in the final quarter of 2023.” You can gain more information HERE

China LEI Decline

“December is the tenth consecutive month in which the China LEI declined, pointing to slower growth in the near term,” said Andrew Dearborn, Economic Research Assistant at The Conference Board. “The only components to contribute positively in December were new medium- and long-term loans, machinery imports, and new real estate construction. Headwinds to growth in China remain as global demand slows and the property downturn continues, although there is upside potential as China reopens in 2023 after COVID-19 restrictions loosen. Real GDP grew by 3.0 percent in 2022, as reported by the Chinese National Bureau of Statistics, The Conference Board forecasts GDP growth to be 5.1 percent in 2023.” You can gain more information HERE