The Conference Board’s index of leading economic indicators (LEI index) is one of the most widely followed leading indicators.  This index tracks a group of  10 data points including… the money supply, consumer goods orders, weekly unemployment claims, capital goods orders, stock prices, average hours for manufacturing workers, the 10 year/fed funds rate spread, building permits, vendor order delivering performance and consumer expectations.  (As you can see, it’s a pretty complicated blob of data).  The LEI index does a good job of predicting how the economy will perform a few months down the road; however, one critism of the index is that it’s too sensitive.  It often predicts more recoveries and recessions than actually happen.  With this in mind, the LEI index is still a helpful piece of information and definitely worth keeping an eye on.

Now that I’ve got my informational piece out of the way, I’ll get down to business.  Every so often I see an economist or financial website come out with their own version of an economic indicator. These homemade indicators will track anything from luggage sales to Starbucks customers hoping to predict the future of our economy.  Usually, I’ll find something about the indicator that I think is flawed and I’ll write it off.  This wasn’t the case with the Forbes Chirp Index.  This index tracks an interesting mix of data that includes insider stock purchases, the spreads on bond yields, road congestion and the use of the word “recession” in the media.  What’s more interesting is that the index is predicting a possible economic recovery sometime next summer.  Check out the video below and make your own judgment.  (I apologize in advance for the economist’s tie in the video)