The index of leading economic indicators extended its long dismal run, falling by 0.2 percent in August versus the Econoday consensus calling for a decline of 0.3 percent. This was the sixth straight decline, though the pace of decline has slackened to 2.3 percent in the last six months from 2.7 percent in the prior six months.

The Conference Board noted the latest decline was led by new orders, which is an unfortunate signal about future business. Still, the report, while saying the economy faces headwinds, does not predict a recession per se. The LEI points to an economy losing momentum but the now-expected 100 basis points of Federal Reserve rate cuts by year end should provide a cushion, it said.

The LEI fell a steep 0.6 percent in July to extend this report's dreary trend. August's consensus is a 0.3 percent decline.

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.