WASHINGTON (AP) — U.S. Treasury prices edged lower Thursday in seesaw trading as good news about the U.S. economy drew cash into riskier investments.
The yield on the 10-year Treasury note rose to 2 percent late Thursday from 1.95 percent just after 10 a.m. Rising yields reflect lower demand for ultra-safe Treasurys.
The yield edged up from 1.98 percent late Wednesday, while the price fell by 16 cents per $100 invested.
The economic outlook brightened early Thursday with news that that new applications for unemployment benefits fell last week for the fourth time in five weeks. The four-week average, which evens out weekly fluctuations, fell to the lowest since June 2008.
Treasurys had gained earlier on renewed fears about instability in Europe’s financial markets. Investors seeking safe place to stash their money drove Treasury prices higher, pulling yields lower.
By late Thursday, the positive economic news had overshadowed worries about the debt crisis in Europe. Stocks bounced back from early losses to close nearly flat.
Also Thursday, the Treasury Department announced that it will auction off $66 billion in notes and bonds next week. The government will sell $32 billion of three-year notes next Tuesday, $21 billion of 10-year notes next Wednesday and $13 billion of 30-year bonds next Thursday.
The price of the 30-year Treasury bond fell 75 cents for every $100 invested, pushing its yield up to 3.07 percent from 3.03 percent late Wednesday.
The yield on the two-year Treasury note was unchanged at 0.26 percent. The three-month Treasury bill paid a yield of 0.01 percent.
Last October, a US intelligence report to Congress revealed that foreign economic espionage worth billions of dollars is being driven by China and Russia and represents a significant and growing threat to the nations prosperity and security.
The Internet has accelerated and amplified economic vulnerabilities given the ease of digital access to mass amounts of data, low barriers of entry to cyber intrusion, and the useful cloak of online anonymity. But this threat to our national economic security isnt confined to cyberspace.
In the interconnected global environment, economic power, access to resources, and cutting edge technologies are defining both power and vulnerabilities. China and Russia have already demonstrated their willingness to engage in a new geo-economic game. Its one the United States needs to learn to play quickly.
During a diplomatic spat last year with Japan, China suspended its export of rare-earth minerals – necessary for key high-tech manufactured items like hybrid engines and solar panels. China has also used its undervalued currency, subsidies, and the weight of its market – both current and future – to demand local content and partnership concessions from foreign companies.
The resulting transfer of technology and marginalization of multinational companies has allowed Chinese companies to take larger chunks of the global solar, wind turbine, and high-speed rail markets. At the same time, Chinese infrastructure and extraction projects in Africa, Central Asia, and Latin America are facilitating Chinese access to both raw materials and political influence.
Russia hasnt hesitated to play the game either, using its oil and natural gas resources to exert political pressure while padding the Kremlins coffers. In 2006 and again in 2009, Russia shut off natural gas supplies to Europe through Ukrainian pipelines to extract concessions from the Ukraine and put political pressure on a rival. Russia – through Gazprom – has also followed an acquisition pattern of plugging the holes of alternate channels of energy supply to Europe in the Balkans, Poland, and perhaps now in Greece.
The United States is unprepared to play this new geo-economic game. Our current approach to economic security abroad reflects a reticence to meld political and economic interests, something Secretary of State Clinton has begun to highlight. This underscores a long-standing structural divide between national security policies and the role of the US private sector in the international commercial and financial system.
The most egregious examples are in Iraq and Afghanistan. American blood and treasure have been spent to establish security and functioning economies, but American companies and interests are often left on the sidelines as Chinese, Russian, and other countries companies profit from oil, mineral, and other sectors.
US economic reach and influence has been taken for granted as a function of the free trade paradigm that the United States helped establish and the competitive advantages of US companies against foreign competitors. This is now in jeopardy, with not only economic advantage but international influence at risk.
As the Venn diagram of economic and national security overlaps ever more exactly, the United States should craft a deliberate strategy that aligns economic strength with national security interests.
Needed: National economic security lens
The intelligence community should prioritize collection and analysis to focus on the global landscape through this national economic security lens. Our homeland security enterprise should be focused less on defending against specific actors and more principally on protecting and building redundancies in the key infrastructure and digital systems essential for national survival. Law enforcement and regulators should have access to beneficial ownership information for investments and companies formed in the United States.
International alliances should be recast to ensure key resource and supply redundancy, while trade deals should be crafted to create new opportunities for influence and economic advantage. The proposed Trans-Pacific Partnership trade accord endorsed by President Obama is a major step in the right direction. We should reconsider doctrines of deterrence – to account for the challenges of attribution in cyberspace as well as the opportunities of entanglement in a globalized environment that would make it patently unwise for countries to try to weaken the United States.
We should view the relationship between government agencies – like the Overseas Private Investment Corporation and US AID – and the private sector as core to the promotion of US interests, creating alliances based not just on trade and development but on shared economic vulnerabilities and opportunities.
In doing this, we must reaffirm our core principles. We are neither China nor Russia, nor should we create structures that move us toward a state authoritarian model. On the contrary, we should remain the vanguard of the global free trade, capitalist system, while preserving the independence of the private sector and promoting ethical American business practices. We should not retreat from the globalized environment we helped shape but instead take full advantage of the innovation and international appeal and reach of American business and technology.
In the 21st century, economic security underpins the nations ability to project its power and influence. The United States must remain true to its values but start playing a new, deliberate game of geo-economics to ensure its security and take advantage of rapidly emerging vulnerabilities and opportunities.
Bio: Juan C. Zarate is a senior adviser at the Center for Strategic and International Studies. He was the first Assistant Secretary of the Treasury for Terrorist Financing and Financial Crimes and served as the Deputy National Security Adviser for Combating Terrorism (2005-2009). The opinions expressed in this commentary are solely those of the author.
French President Nicolas Sarkozy and
Germany’s Chancellor Angela Merkel will discuss European
economic convergence and a new treaty when they meet in Berlin
on Jan. 9, France’s budget minister and government spokeswoman
Valerie Pecresse said today.
Speaking to reporters after the weekly cabinet meeting in
Paris, Pecresse said the government will proceed with its plan
for a tax on financial transactions, in spite of the risk of
foreign competition, and use the money collected for domestic
issues.
The French senate will vote on legislation that makes it a
crime to deny any genocide recognized by French law before the
end of January, Pecresse said. The bill is a “general” one and
isn’t “against Turkey,” she told reporters.
To contact the reporter on this story:
Helene Fouquet in Paris at
hfouquet1@bloomberg.net
To contact the editor responsible for this story:
Steve Rhinds at
srhinds@bloomberg.net
Papademos Warns Greek Economic Collapse Looms Without Cuts January 06, 2012, 4:05 AM EST
Business Exchange
E-mail
Print
More From Businessweek
Greece Running Out of Time as Debt Talks Stumble: Euro Credit
France Loses AAA Status as S&P Wields Ax on Debt Ratings
Sarkozy Dealt Blow 100 Days Before Vote With Loss of AAA
Nowotny Says S&P Favors Fed’s Bond Buying Over ECB’s Policy
Greek Euro Exit Weighed By German Lawmakers, Seen as Manageable
By Maria Petrakis and Natalie Weeks
(Adds EU comment on next Greek loan installment in sixth paragraph. For more on Europe’s debt crisis, click on EXT4.)
Jan. 5 (Bloomberg) — Prime Minister Lucas Papademos told Greeks that cuts in income are the only way to stay in the euro and get more financing from international creditors to avert an economic collapse that may otherwise come as soon as March.
“We have to give up a little so we don’t lose a lot,” Papademos said, according to an e-mailed transcript of his statements to union and business leaders yesterday. Talks later this month with officials from the European Union, the International Monetary Fund and the European Central Bank, the so-called troika, will focus on a “credible” economic plan for 2012 to 2015.
“Without this agreement with the troika and subsequent financing, Greece in March faces the immediate risk of a disorderly default,” Papademos said.
Appointed in early November to lead an interim government to secure a second financing package, Papademos is racing to complete a voluntary swap of debt with private bondholders, part of the new rescue plan for the country, which also includes 130 billion euros ($166 billion) of public funds. Under the terms of Greece’s second bailout, investors would take a 50 percent hit on the nominal value of 206 billion euros of privately owned debt. The country redeems 14.4 billion euros of bonds on March 20.
The next loan tranche of 5 billion euros under Greece’s May 2010 EU-led bailout, originally scheduled for December, will be delayed until March because of the discussions on the new aid package, Olivier Bailly, a spokesman for the EU, told reporters today in Brussels.
Bond Yields Rise
Greece’s ASE benchmark stock index fell 2.2 percent to 647.58 at the close of trading in Athens today. The yield on the 10-year Greek bond added 7 basis points to 34.94 percent. Two- year note yields rose 72 basis points to 135.02 percent.
Greece will sell 1.25 billion euros of 26-week Treasury bills on Jan. 10, the Athens-based Public Debt Management Agency said today.
The premier is chairing a Cabinet meeting today on an omnibus bill that will include opening up so-called closed professions, including taxis, and regulation on settling outstanding taxes. The legislation is intended to tackle pledges that the troika has said aren’t being implemented effectively or promptly enough to allow the economy to become more competitive and return to growth.
‘Belt Tightening’
Despite two years of wage cuts and tax increases, the IMF estimates Greece’s 2011 deficit to be about 9 percent of gross domestic product compared with 10.6 percent in 2010. The economy was expected to shrink about 6 percent last year, according to the latest IMF estimates.
“Greece has not much room for maneuver, but must rely on further austerity and belt-tightening, while extracting as much as it can from sovereign debt holders in current debt swap negotiations,” said Thomas Costerg, an economist at Standard Chartered Bank Plc in London. “Risks are definitely on the rise: there is bailout fatigue in the north, and austerity fatigue in the south, especially in Greece, where GDP shows no sign of bottoming.”
Papademos, 64, assumed office after Germany and France warned Greece last year that they would cut all aid to the country until it signs up to a bailout plan agreed to in Brussels on Oct. 26.
Elections Call
Former Prime Minister George Papandreou, who told his socialist Pasok party yesterday that he would step down as leader and won’t seek re-election as premier, handed off to Papademos after at least five austerity packages whittled down support for his government and his majority in parliament.
Maria Damanaki, the EU’s Maritime Affairs and Fisheries Commissioner, said Greece will need to make more sacrifices. “But I repeat, it gives opportunities,” said Damanaki, whose comments were sent by e-mail after a meeting with Papademos where they discussed use of EU funds to guarantee investments and create jobs.
Political leaders like Antonis Samaras, the head of the second-biggest party, New Democracy, are keeping up the pressure on Papademos to resolve the debt swap and call elections. While Finance Minister Evangelos Venizelos has said elections will be held at the end of April, according to a Dec. 27 report by state-run Athens News Agency, Samaras has said elections can be held at the end of March.
Wage Cuts
New Democracy, which is calling for no more wage cuts or tax increases, had 21 percent voter support, compared with 13 percent for Papandreou’s Pasok, according to 1,004 people surveyed Dec. 28-29 by Kapa Research. Nearly eight in 10 Greeks say the country’s leaders should do whatever is needed to remain in the euro, according to that poll.
Papademos said the troika had pointed to a range of issues to be tackled. They include adjustments to the minimum wage, abolition of Christmas and summer vacation bonuses and automatic wage increases.
Yannis Panagopoulos, the head of Greece’s biggest private- sector union group GSEE and the driving force behind seven general strikes last year, said he was willing to discuss how to reduce non-wage costs to protect jobs.
The organization won’t consider changes to national labor accords such as cutting the minimum wage and the so-called 13th and 14th annual wages, Panagopoulos said in comments on NET TV.
Greece’s debt is forecast to balloon to almost double the size of its shrinking economy this year without the write-off, the European Commission estimates. The swap is aimed at helping reduce debt to 120 percent of gross domestic product by 2020. A successful swap will reduce the deficit this year to 5.4 percent of GDP, in part by savings on debt servicing costs, according to Greece’s 2012 budget.
–With assistance from Jones Hayden in Brussels and Marcus Bensasson in Athens. Editors: Leon Mangasarian, Alan Crawford
To contact the reporters on this story: Maria Petrakis in Athens at mpetrakis@bloomberg.net; Natalie Weeks in Athens at nweeks2@bloomberg.net
To contact the editor responsible for this story: Tim Quinson at tquinson@bloomberg.net
Iranian officials struck a defiant posture Thursday in response to a proposed oil embargo by the European Union, calling the intensified efforts to halt Irans nuclear program, including new US sanctions, tantamount to an economic war.
The strong words were the latest in a series of escalating military and diplomatic responses by Iran in recent weeks amid growing pressure from Western powers. On Wednesday, Iran warned the United States that it would take action if a US aircraft carrier that left the Persian Gulf through the Strait of Hormuz were to return. The United States has said that the threats would not cause it to alter military deployments.
Britain added its voice to the chorus Thursday, with Defense Minister Philip Hammond cautioning that any attempt by Iran to close the strait would be illegal and unsuccessful.
The official Iranian news agency IRNA quoted one senior member of the Iranian parliament as saying that pressure from bullying nations served only to make the country more resilient. Press TV, an official Iranian news site, headlined its report with a warning against saber-rattling by Britain.
Mixed in with the bluster Thursday was tacit acknowledgement of the potential economic hardships that stronger sanctions could cause in Iran, where the economy is heavily reliant on oil exports, including through the Strait of Hormuz.
Iran will weather the storm, Foreign Minister Ali Akbar Salehi said Thursday, adding that he was not concerned at all about the imminent ban on its oil by the EU. The economic minister, Shamseddin Hosseini, likened the ban to an economic war.
Iran, with divine assistance, has always been ready to counter such hostile actions, and we are not concerned at all about the sanctions, Salehi told a Tehran news conference. Just as we have weathered the storm in the last 32 years with the hold of God and efforts that we make, we will be able to survive this as well.
But he also said that Iran would like to reopen talks with the West on the nuclear issue, suggesting that the renewed talks be held in Turkey. Salehi appeared at the news conference alongside the Turkish foreign minister, Ahmet Davutoglu, who said that Iran had responded favorably to the notion of resuming negotiations. That was interpreted as an effort by Iran to buy time to continue its nuclear program.
WASHINGTON (Reuters) – The Federal Reserve will begin this month to publish policymakers forecasts for interest rates, including when interest rates, which are currently near zero, will rise.
The move, announced on Tuesday, could give the sluggish economic recovery a bit more lift by better aligning bets in financial markets with the consensus view at the central bank.
It is also the latest step taken under Chairman Ben Bernanke to provide more clarity about the workings of the central bank, which has historically been shrouded in mystery, often deliberately so.
Following is a QA about the decision to issue the forecasts:
Q: Why did the Fed make the move, and why now?
A: The central bank cut its conventional tool for speeding up or slowing down economic growth — the fed funds interest rate — to near zero three years ago. But that wasnt enough to pull the economy out of a harsh recession.
Bernanke has since turned to a series of unconventional measures to spur economic growth.
The first approach was a massive expansion of the Feds balance sheet by buying $2.3 trillion in bonds to drive down borrowing costs further. That process came under withering criticism within the United States and internationally for risking inflation and weakening the dollar.
While the Fed has continued to tinker with its balance sheet, replacing maturing securities with longer-dated bonds, its next policy move has been to give investors and the public more clarity about the thinking of its top officials.
The decision to publish interest rate forecasts wont commit the Fed to providing more easy money. But in practice, it could demonstrate that most policymakers dont expect the first rate hike until farther into the future than was previously thought.
It will also help the Fed out of the bind it created in August when it replaced a vague pledge to hold rates at ultra-low levels for an extended period with the more specific vow to hold them there until at least mid-2013. That step was aimed at reassuring markets that the Fed wouldnt turn on a dime and start to raise interest rates if economic data pointed to an improved outlook over a few months.
However as mid-2013 draws nearer, Fed officials wondered whether they would have to push the date further out.
Many analysts believe the forecasts will make clear that the majority of policymakers dont expect the first rate hike to come until 2014 at the earliest.
Bernanke, who has made greater transparency a hallmark of his tenure, has put colleagues in charge of recommending improvements to policy clarity. Further changes, such as publishing explicit inflation targets, may be in the offing.
Q: How will the new forecasts work?
A: Beginning at its January 24-25 meeting, the Fed will issue information about policymakers projections for the appropriate level of the fed funds rate in the fourth quarter of the current year and the next few calendar years.
The Fed will also report officials projections for the likely timing of the first increase in the fed funds rate.
In its current forecasts for growth, employment and inflation, the Fed issues a table showing the full range of forecasts as well as a central tendency that eliminates the highest and lowest projections. The interest rate projections may follow a similar approach.
The Fed will also describe key factors underlying policymakers policy projections as their expectations regarding the size of the Feds balance sheet.
Q: What is the benefit of making interest rate projections?
A: Some economists argue that giving conditional signals about the future course of monetary policy can produce better outcomes than setting interest rates from meeting to meeting.
Some at the Fed also believe that providing rate path projections over the coming years will be especially helpful with rates near zero because the central bank will be able to raise the cost of borrowing more gradually than if it continues to announce policy rates one meeting at a time.
Q: What are the risks?
A: One concern the some central banks have had with publishing rate path projections is that they could send confusing signals to investors. For example, they could be viewed as a firm commitment rather than an expectation which is subject to change as conditions evolve.
The head of the Bank of England, Mervyn King, has been firmly against forecasts for interest rates, arguing last year that it is too open to misinterpretation.
Fed officials have discussed the potential risks and decided they were manageable.
One potential pitfall is that if the Fed uses its practice of dropping out the three highest and three lowest forecasts to publish a central tendency, it may end up giving greater weight to the views of policymakers who favor tighter policy, said Barclays Capital economist Michael Gapen.
There is some risk that the central tendency may communicate policy tightening will occur sooner than markets currently expect, Gapen said in a note to clients.
Another risk is that Fed policymakers stick to their projections for longer than might be warranted by changing economic data, said Ian Shepherdson, chief US economist at High Frequency Economics.
Sometimes, less openness can be more effective, and we wonder whether both Mr Bernanke and investors might come to regret this decision, he said in a note.
Q: Does anyone else have experience doing this?
A: Norway and Sweden publish rate path forecasts. New Zealand issues forecasts for 90-day bills that are seen as a proxy for its policy rate.
(Reporting by Mark Felsenthal. Additional reporting by Mantik Kusjanto in Wellington, Balazs Koranyi in Oslo, and David Milliken in London; Editing by Ramya Venugopal)
(Source: US Small Business Administration) ATLANTA, Jan. 4, 2012 – The US Small Business Administration is reminding businesses in Mississippi that working capital loans are still available to small businesses economically impacted by the severe storms, tornadoes, straight-line winds and associated flooding that occurred from April 15 28, 2011.
Businesses that suffered economic losses as a result of the disaster and want to apply for low-interest loans from the SBA are urged to do so before the Jan. 30, 2012 deadline, said Frank Skaggs, director of SBA Field Operations Center East.
Economic Injury Disaster Loans (EIDLs) up to $2 million are available at 4 percent for small businesses and 3 percent for private nonprofit organizations of all sizes, with terms up to 30 years. The loans are intended to pay fixed debts, payroll, accounts payable, and other expenses that could have been paid had the disaster not occurred. To be considered for this assistance, disaster victims need to apply by the deadline.
These EIDLs are available to businesses and nonprofits in the counties of Alcorn, Attala, Benton, Bolivar, Calhoun, Carroll, Chickasaw, Choctaw, Claiborne, Clarke, Clay, Coahoma, Copiah, Covington, DeSoto, George, Grenada, Greene, Hinds, Holmes, Humphreys, Itawamba, Jasper, Jones, Kemper, Lafayette, Lauderdale, Leake, Lee, Leflore, Lowndes, Madison, Marshall, Monroe, Montgomery, Neshoba, Newton, Noxubee, Oktibbeha, Panola, Perry, Pontotoc, Prentiss, Quitman, Rankin, Scott, Simpson, Smith, Sunflower, Tallahatchie, Tate, Tippah, Tishomingo, Tunica, Union, Warren, Washington, Wayne,Webster, Winston, Yalobusha and Yazoo in Mississippi; Choctaw, Colbert, Franklin, Lamar, Lauderdale, Marion, Mobile, Sumter and Washington in Alabama; Crittenden, Desha, Lee and Phillips in Arkansas; and Fayette, Hardeman, Hardin, McNairy and Shelby in Tennessee.
To obtain disaster loan information and application forms, call the SBAs Customer Service Center at 800-659-2955 (800-877-8339 for the deaf and hard-of hearing) or send an email to disastercustomerservice@sba.gov. Loan application forms can also be downloaded from www.sba.gov. Completed applications should be mailed to: US Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155.
Those affected by the disaster may also apply for disaster loans electronically from the SBAs website at https://disasterloan.sba.gov/ela/.
The deadline for economic injury applications is January 30, 2012.
For more information about the SBAs Disaster Loan Programs, visit our website at www.sba.gov.
The year might be fresh and new, but Canadians already have a dark view of their economic prospects for 2012 with large numbers believing the country is already in recession and top economists seeing storm clouds as far out as 2013.
The views of economists from Canada’s five biggest banks are coloured by expectations that the budget tightening that Americans largely deferred in 2011 will finally take hold in 2013, creating its own economic restraint.
Those economists presented their view Thursday to an event hosted by the Economic Club of Canada, the tone for which was set by Economic Club polling results that show 70 per cent of Canadians believe Canada has already slipped back into recession.
“That does surprise me,” said Helmut Pastrick, chief economist for Central 1 Credit Union in an interview, because “Canada is not in a recession. The United States is not in a recession.”
Nationally, 63 per cent of respondents said they believed Canada is in a mild recession and seven per cent reported a belief the recession is severe. For the BC component, those numbers were 68 per cent and five per cent.
“Canadians, in aggregate, are remarkably canny about the economy,” Michael Marzolini, chairman of Pollara, said while presenting the survey findings. “It’s the most pessimistic findings we’ve had in 16 years. Canadians are more self-centred.”
Considering Canada is in an economic climate where job growth is slow and wage increases lacklustre, Pastrick added that perceptions that people aren’t getting ahead is understandable.
In the polling data, commissioned by the Economic Club and conducted by Pollara Strategic Insights, respondents reporting generally feeling they are “holding their own” or falling behind when it comes to matters of personal finances.
On the question of how respondents felt about their finances in a general sense, 48 per cent said they were merely holding their own. In BC, however, the number was 51 per cent.
However, 33 per cent nationally said they felt they were losing ground at the national level, a proportion that rose to 35 per cent in BC
“That does speak to income growth, and the lack thereof,” Pastrick added.
Inflation, Pastrick said, averaged about 2.8 per cent in 2011, and was “higher than typical wage gains.”
Ken Peacock, vice-president and chief economist for the Business Council of BC, added that the perceptions of Canadians also appears to reflect the steady stream of bad news about a possible recession in Europe and escalating debt in the US
“The world is definitely uncertain, to say the least,” Peacock said, “and I think some of those external factors are going to start to weigh on BC”
However, in the meantime, Peacock said Canada “just doesn’t have that same level of problem or concern.”
The provincial government’s most recent survey of its Economic Forecast Council, estimated BC’s economy will grow 2.2 per cent in 2012, which is “not a vigorous or robust climate,” Peacock added.
Nationally, the bank economists have concerns about 2013, based on what they see potentially happening in the US
“What does 2013 look like? Not a whole lot better than 2012,” Avery Shenfeld, chief economist with CIBC World Markets, said Thursday. “As the US defers fiscal tightening for another year, 2013 is set up for huge fiscal tightening to hit the US economy.”
Craig Alexander, chief economist with TD Economics, warned that the many desperate fiscal decisions the United States has made over the past few years will truly come to roost in 2013.
These include the billions spent in stimulus spending, tax cuts, bailouts and record high deficits since the financial crisis, as well as the total gridlock in Washington that came to a head in 2011 when politicians failed to find a long-term solution to the nation’s debt crisis.
“Many of those fiscal measures are expiring, and as they expire they will create a drag on the economy. What is more stark is what happens in 2013,” Alexander said.
The margin for error is 1.8 per cent 19 times out of 20 for the national results.
For the first time since 1996, the
components of the US leading economic indicator index will
change, according to the New York-based Conference Board.
Gone will be the inflation-adjusted money supply, the
Institute for Supply Management’s supplier deliveries gauge, the
Thomson Reuters/University of Michigan’s measure of consumer
expectations and the Commerce Department’s orders for non-
defense capital goods, the private research group said in a
statement.
Replacing the money supply will be the Conference Board’s
own Leading Credit Index, which aggregates measures of the yield
curve, interest-rate swaps and the Federal Reserve’s senior loan
officer survey. The ISM’s supplier deliveries gauge will give
way to the group’s index of new orders.
Instead of using one measure of consumer confidence, the
Conference Board will include an equally weighted average of the
Michigan sentiment expectations reading and its own measure.
Finally, the capital goods component will be replaced by the one
that excludes commercial aircraft.
The Conference Board called it “the first major overhaul”
of the LEI since 1996, when the group took over responsibility
for the business cycle indicators program from the Bureau of
Economic Analysis at the Commerce Department. The changes
respond to structural changes in the US economy and are aimed
at making the LEI a better predictor of peaks and troughs in the
business cycle, the Conference Board said.
The new index will start with the December number coming
out on Jan. 26, the group said, and readings will be revised
retroactively to 1990.
To contact the reporter on this story:
Carlos Torres in Washington at
Ctorrres2@bloomberg.net
To contact the editor responsible for this story:
Christopher Wellisz at
cwellisz@bloomberg.net