Retail Observer

RETAILOBSERVER.COM JULY 2019 32 E conomists are never at a loss for ways to slice-and-dice the numbers to predict the future course of our economy. Whenever I prepare my presentations, I look at dozens of indicators that help me assess the likelihood of a stock market surge, a drop in unemployment, the next quarter's GDP or how much consumers will spend at Christmas. I get reports from sources with remarkable levels of analysis that give me a clear direction regarding our financial future. When the April jobs report came out last month, the pundits on Bloomberg presented reams of statistics, with charts from the BLS, the BEA, the IMF, and even videos of Cramer talking faster than ever. I spoke at an event in Sacramento last week, and two days before I was ready to wax poetic about the economy, our government increased the tariffs on billions of dollars of Chinese goods and sent an armada of warships off to Iran. Try making sense of a world where inconsistency is the rule. Let me bring it all together by recommending a single report that can serve as a handy guide for making predictions about the next twelve months. The Conference Board, creators of the Consumer Confidence Index, have prepared the latest edition of a communiqué that has been one of the most dependable predictors of what's to come: growth or recession. It's known as the LEI, or the Conference Board's Leading Economic Index. Published monthly, it combines 10 leading measures of economic activity into a single number that lets people like me make predictions about the future course of the American economy. You can only imagine the complexity of such a report, yet its practical applications are immense. The LEI index will decline prior to a downturn, and it will start to rise in advance of an improving economy. Using the report allows me to make intelligent assessments of coming economic activity in advance of a positive or negative shift in America's future. Since January of this year, we've seen the LEI move in the same direction as consumer confidence. The index hit 112.1 in May, suggesting that a majority of indicators are pointing to stronger consumer spending, improving employment numbers and a rise in GDP – all signs that the probability of a recession in 2019 is remote. So here are some numbers that will help you sleep better at night. America created 263,000 jobs in April, unemployment hit a low of 3.6, and there are 7.5 million jobs available in the country as you read this article. First Quarter GDP came in at a very strong 3.2% over the prior year, consumer spending rose over 2%, and retail sales were up. Listen to what Ataman Ozyildirim, director of economic research at The Conference Board LEI, said of the April LEI report: "The U.S. LEI rose in April, the third consecutive increase, with a majority of the leading indicators making positive contributions. Stock prices, financial conditions, and consumers' outlook on the economy buoyed the U.S. LEI, although the manufacturing sector showed continuing weakness. The Conference Board expects economic growth to moderate toward 2 percent by year end. The current expansion will enter its 11th year in July, becoming the longest expansion in U.S. history." The bottom line is this: assuming we have a positive outcome to the tariff situation, the second half of the year will be moderate, the probability of a recession is now less than 20%, and consumers are confident, upbeat and willing to spend their money. Next time you are curious about how the economy is performing, google "Conference Board LEI" and the numbers will tell you all you need to know. AN INDEX THAT PREDICTS YOUR FUTURE Meet the LEI Joe Higgins Economic Viewpoint RO Joe Higgins—with more than 44 years in the appliance industry—speaks at conventions, seminars and sales meetings across America. His work includes presentations on the United States economy, leadership, creating a high performance culture, healthy teams, and customer service. Visit www.q4qwithjoe.com.

• Cover