Following a more traditional leading indicator approach, we use the NBER framework for leading and coincident data. The method uses fundamental economic leading indicators to predict changes in the NBER coincident index, which captures personal income, initial unemployment claims, industrial production and manufacturing sales.

Long-leading indicators for the US economy have continued to improve and point to a strong first half of 2013 for US economic data. We are seeing some signs that housing market indicators may lose some momentum and consumer confidence has fallen back slightly too, but the overall level of expansion in leading indicators is robust. We also reiterate that 1Q13 will see notable tailwinds in the form of increased demand for capex to replace destroyed capital (housing, cars, etc) after Sandy.