What to Make of Another Uptick in Consumer Expectations


Apr. 24 2018, Updated 7:12 p.m. ET

Consumer expectations for business conditions

The Conference Board Leading Economic Index (or LEI) has ten constituent indicators, and all but one of these forward-looking indicators are based on expectations. The average consumer expectations for business is not a forward indicator as it is derived using expectations, rather than any economic indicator. This economic indicator is an average of two separate surveys.

One of the surveys is conducted by the University of Michigan and Reuters, and a second survey is conducted by the Conference Board. The first survey collects consumer expectations for a period 12 months ahead, and the latter records consumer expectations for business conditions six months ahead.

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Recent data

The March Conference Board LEI reported the average consumer expectations for business conditions for March at 0.66, a sharp decrease from the February reading of 0.83. Consumer expectations for business conditions have declined in March because of the increased trade tensions between the US and China (FXI), which threatened global markets (SCZ) with a full-blown trade war.

The director of economic indicators at the Conference Board, Lynn Franco, said that consumers’ assessment of current conditions declined, primarily because of the decline in business conditions and the decline in the outlook for stock markets (VOO).


The Conference Board LEI constructed from the March data signals no immediate risks to the US economy (MDY). The recent risks that plagued the financial markets have retreated for now and the focus can shift to the earnings.

The increasing chatter about the yield curve (BND) inversion could continue, but the economic data points to strong growth for the economy. Overall, the leading economic index based on March data is not signaling any changes to the business cycle.


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