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Comprehensive Benchmark Revisions for The Conference Board Leading Economic Index® for the United States


  • Gad Levanon

    (The Conference Board)

  • Ataman Ozyildirim

    (The Conference Board)

  • Brian Schaitkin

    (The Conference Board)

  • Justyna Zabinska

    (The Conference Board)


Following an extensive reevaluation of existing indicators included in The Conference Board Leading Economic Index® for The United States, we propose a comprehensive revision of the composite index. In this paper we present the case for replacing three of the components and making a minor adjustment to one other component. The resulting index addresses structural changes that have occurred in the U.S. economy in the last several decades. The changes in the LEI composition include: 1) incorporating in the LEI a new Leading Credit Index (LCI) rather than real money supply (M2) starting in 1990 (real M2 remains in the index before 1990); 2) replacing the ISM Supplier Delivery Index with the ISM New Orders Index; 3) replacing the Reuters/University of Michigan Consumer Expectations Index with an equally weighted average of consumer expectations of business and economic conditions using questions from surveys conducted by Reuters/University of Michigan and The Conference Board; and 4) replacing “New Orders for (nondefense) Capital Goods” with “New Orders for (nondefense) Capital Goods excluding Aircraft.” These changes are assessed using turning point analysis, probit models and an indicator scoring system based on Markov Switching models. Real time out-of-sample forecasting exercises are used to confirm that the changes to the composition help the LEI forecast more accurately future economic conditions.

Suggested Citation

  • Gad Levanon & Ataman Ozyildirim & Brian Schaitkin & Justyna Zabinska, 2011. "Comprehensive Benchmark Revisions for The Conference Board Leading Economic Index® for the United States," Economics Program Working Papers 11-06, The Conference Board, Economics Program.
  • Handle: RePEc:cnf:wpaper:1106

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    Cited by:

    1. Boriss Siliverstovs, 2015. "Dissecting the purchasing managers' index," KOF Working papers 15-376, KOF Swiss Economic Institute, ETH Zurich.
    2. Abberger, Klaus & Graff, Michael & Siliverstovs, Boriss & Sturm, Jan-Egbert, 2018. "Using rule-based updating procedures to improve the performance of composite indicators," Economic Modelling, Elsevier, vol. 68(C), pages 127-144.
    3. Kajal Lahiri & Liu Yang, 2015. "A Non-linear Forecast Combination Procedure for Binary Outcomes," CESifo Working Paper Series 5175, CESifo Group Munich.
    4. Lahiri Kajal & Yang Liu, 2016. "A non-linear forecast combination procedure for binary outcomes," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 20(4), pages 421-440, September.
    5. Levanon, Gad & Manini, Jean-Claude & Ozyildirim, Ataman & Schaitkin, Brian & Tanchua, Jennelyn, 2015. "Using financial indicators to predict turning points in the business cycle: The case of the leading economic index for the United States," International Journal of Forecasting, Elsevier, vol. 31(2), pages 426-445.

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