SPY - The Long Leading Forecast Through Year End 2024

2024-02-14 10:11:57 ET

Summary

• Long leading indicators provide insights into the likely state of the economy one year from now.
• Corporate bond yields, housing, credit conditions, and real retail sales per capita are positive indicators.
• The yield curve and real money supply are the only unequivocally negative indicators.
• Supply Chain pressures have apparently abated, and the balance of long leading indicators are now tending slightly positive, indicating that the remainder of 2024 is likely to show continued expansion.

Introduction

With the report on Q4 GDP and the Senior Loan Officer Survey of bank lending by the Federal Reserve, we have almost all the information we need to take a long-range peer into the likely state of the economy one year from now, via the long leading indicators.

What Are The Long Leading Indicators?

I have several systems for forecasting the economy. One is the high-frequency "Weekly Indicators," which, as the name implies, is updated weekly and is thus very timely. Typically in the past, for the short term until roughly 6 months out, I have made use of a second, K.I.S.S. method, which relies on the Index of Leading Indicators. I have not done that in the past year, because as I wrote several months ago, the un-kinking of supply chain bottlenecks, which shifted the entire supply sided curve to the right (meaning expansionary disinflation) swamped that paradigm. For the longer term, essentially one year out, I look to the long leading indicators, which have a very long history of signaling well in advance of an economic turn. These, too, were affected by the supply side disinflation last year, but that appears to have ended....

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