Leading Economic Index
The Leading Economic Index (LEI) is a composite indicator designed to predict future economic activity.
Meaning in Practice
The LEI combines multiple forward-looking components such as new orders, consumer expectations, and financial indicators. It is typically published monthly. Rising readings suggest future economic expansion, while declines may signal slowdown.
Why It Matters
The index provides early signals about the direction of the business cycle. Policymakers and investors use it to anticipate turning points. It supports forward-looking risk assessment and planning.
Market Impact
An improving LEI can boost equity markets and lift bond yields due to growth optimism. A declining index may increase recession concerns and support safe-haven assets. Currency movements reflect changing growth outlooks.
Example
If the LEI rises consistently for several months, it may indicate strengthening economic momentum ahead.