This morning the Conference Board released October's index of Leading Indicators and there is simply no way to sugar coat the news:
The leading index declined sharply in October as stock prices, building permits, consumer expectations and the index of supplier deliveries made large negative contributions to the index, despite continued positive contributions from real money supply and the interest rate spread. In the past two months, without the very large positive contributions from inflation-adjusted money supply (the largest in seven years), the leading index would have been substantially weaker. Between April and October 2008, the leading index declined 2.4 percent (a -4.7 percent annual rate), falling considerably faster than the 1.2 percent decrease (a -2.3 percent annual rate) over the previous six months. In addition, the weaknesses among the leading indicators have remained widespread in recent months.
I've been blogging about two possible resolutions of the recession next year: a tepid recovery based on monetary infusions vs. a deflationary spiral. The Conference Board statement goes right to this point: monetary infusions have not been sufficient to overcome the black hole-like gravitational pull of the deflationary vortex.
Simply not good news. As I've written before, most pundits would improve their forecasts by simply parroting the trend of the leading indicators. There is, perhaps, a slight silver lining for savers. If the forecast of the leading indicators is correct, then investment decisions have gotten easier: cash will be king.