The Conference Board's leading economic index is down 0.8 percent in October after an unrevised down 0.7 in September. The October change is below the consensus of down 0.6 percent in the Econoday survey of forecasters.

Two of 3 financial components are down in October and 1 is up. Total financial components made a minus 0.9 contribution to the change in the overall index. Softness in the interest rate spread for 10-year treasury notes over the fed funds rate and the leading credit index are only dented by a modest increase in stock prices as measured by the S&P 500 index.

Two of 7 non-financial components are down in October, three are up, and two are unchanged. The negative contribution from average consumer expectations for business conditions and the ISM new orders index more than offset the positives. Non-financial components made a minus 1.9 contribution to the change in the index.

The report said,"The LEI contracted by 3.3 percent over the six-month period between April and October 2023, a smaller decrease than its 4.5 percent contraction over the previous six months (October 2022 to April 2023)." The Conference Board anticipated"a very short recession" in the near future due to"elevated inflation, high interest rates, and contracting consumer spending-due to depleting pandemic saving and mandatory student loan repayments".

Down by 0.7 percent in September, the index of leading economic indicators in October is expected to extend its long streak of decline, down a consensus 0.6 percent. This index has long been signaling a coming recession.

The index of leading economic indicators is a composite of 10 forward-looking components including building permits, new factory orders, and unemployment claims. The report attempts to predict general economic conditions six months out.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the index of leading indicators, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly -- and causing potential inflationary pressures. The index of leading indicators is designed to predict turning points in the economy -- such as recessions and recoveries. More specifically, it was designed to lead the index of coincident indicators, also now published by The Conference Board. Investors like to see composite indexes because they tell an easy story, although they are not always as useful as they promise. The majority of the components of the leading indicators have been reported earlier in the month so that the composite index doesn't necessarily reveal new information about the economy. Bond investors tend to be less interested in this index than equity investors. Also, the non-financial media tends to give this index more press than it deserves.