The Conference Board’s leading indicators increased in December, and there was a revision to November's increase, revised up as well. The Conference Board said, “It is now more likely that the five-month decline in the leading index was only a pause in the rising trend that has been underway since March 2003… The behavior of the leading index since the middle of 2004 is consistent with the economy continuing to expand in the near term, but more slowly than its long-term trend rate.” Just as I discussed in Wednesday’s webinar, it appears that we’re in no danger of a boom, and the danger of a recession is very low. We’re “trapped” in a time of above average economic growth that seems to get no respect from the business press.

The Consumer Price Index rose +3.3% for the year. Energy was the big culprit, up +16.6% for the year. Inflation should be rather tame this year, with a very good chance of being below 3%, but that’s a good level to use for planning. My forecast is that it will be 2% for 2005.

The Producer Price Index dropped -0.7%, declining for the first time in six months, caused by a -4.0% drop in energy prices. The index was +4.1% for the year, the highest in 14 years, and not all of it reached consumers. This is one reason why I adjust for inflation with the CPI and not the PPI. No one buys things with PPI dollars.