All the variables in the Augusta Leading Economic Index (LEI) were adversely affected according to December data. This is the first time all five components have been negatively affected since April 2022.
Residential building permits fell 23 percent from November and initial claims for unemployment insurance increased by 40 percent. Job openings fell 2.3 percent, and the Dow Jones Industrial Average finished December 0.04 percent lower than the end of November. Inflation in the south increased by 0.1 percentage points to 2.8 percent.
Overall, the Augusta LEI fell 1.2 percent in December from November. It is 0.5 percent lower than December 2023. The Augusta LEI has fallen in five of the last six months, falling 2.4 percent over the second half of 2024.
The Augusta LEI is modeled on The Conference Board Leading Economic Index for the US. The Conference Board index fell 0.1 percent in December and declined 1.3 percent in the second half of 2024. Like the Augusta LEI, building permits fell and initial claims for unemployment increased at the national level in December.
The US LEI has been declining since the end of 2021 although The Conference Board writes that it is not currently indicating recession. The Augusta LEI has generally been declining since the spring of 2022, but it also is not indicating a recession, more a correction from the post-COVID boom. One indicator of recession is the Diffusion Index which indicates recession if it is below 50. While December data gives a diffusion index of 10, the index moves around a lot at the local level (see graph below). I would be more concerned if the index consistently fell below 50.
