Global anchor · Economy · Economy and Confidence
42neutral
Now 100.14 | Data for Sep 2026
Hot and cold describe position, not good or bad: warm does not mean a fall is coming, and an extreme reading does not mean a quick reversal. We describe history only, with no buy or sell advice.
What it is
The OECD’s composite leading indicator, built from orders, confidence, interest-rate spreads and other data; 100 is the long-term norm. The headline reading is for the G20; major economies are also shown.
It usually turns a few months before GDP, which makes it one of the most widely used gauges of where the economy is heading.
The headline reading is for the G20; 100 = long-term norm.
Where it stands now
coldcoolneutralwarmhotHatched = earlier periods that were also neutral
| Economies | Percentile | Level | Data month |
|---|---|---|---|
| South Korea | 94 | hotat an extreme | Sep 2026 |
| UK | 82 | hot | Sep 2026 |
| US | 78 | warm | Sep 2026 |
| Germany | 76 | warm | Sep 2026 |
| Japan | 62 | warm | Sep 2026 |
| China | 6 | coldat an extreme | Sep 2026 |
When it was here before
US stocks after it began, cumulative1 yr2 yr3 yr
For each period, the changes 1, 2 and 3 years after it began are cumulative and measured from its first month; “What happened next” is measured from every neutral month, so the two give different numbers. The events named beside each period are major events of that time, not necessarily related to the readings here.
What happened next
Bars: median cumulative changeEarlier months with Leading index neutral, excluding the current period (123)All months (670)
Median of the deepest drop below the starting month within the next 5 years: −3.5% for months with Leading index neutral; −5.4% for all months.
The neutral months come from a small number of market episodes (17), and neighboring months are not independent events; rises and falls are all listed. This is the historical record, not a forecast. “US stocks” means the S&P 500 price index compiled by Professor Shiller (monthly average, excluding dividends).
| Median position | Back to neutral (40–60) | Still neutral | |
|---|---|---|---|
| 1 yr later | 39cool | 22% | 22% |
| 3 yr later | 33cool | 14% | 14% |
| 5 yr later | 23cool | 18% | 18% |
Has hot or cold lined up with later returns?
1970–2021: average yearly change in US stocks over the next 5 years
In this period, the hotter the month, the lower the average over the next 5 years. The months overlap, so there are really only a few market episodes. This is a tendency, not a rule, and not a forecast.
What it is linked to
Leading indextoCopperCommon explanation: Knock-on · same direction
Expanding manufacturing needs more copper
This issue: Leading index at 42 (neutral), Copper at 91 (hot) — at least one is in the neutral range (40–60), so we make no call this issue.
Supported by the dataAgreement +0.44 · in step in 40 of 42 5-year periods
Leading indextoIndustrial outputCommon explanation: Knock-on · same direction
Orders and confidence move first, and production adjusts after
This issue: Leading index at 42 (neutral), Industrial output at 61 (warm) — at least one is in the neutral range (40–60), so we make no call this issue.
Supported by the dataAgreement +0.66 · in step in 10 of 10 5-year periods
ConfidencetoLeading indexCommon explanation: Knock-on · same direction
Business and consumer confidence surveys pick up turning points in the economy early, moving with the leading index
This issue: Confidence at 22 (cool), Leading index at 42 (neutral) — at least one is in the neutral range (40–60), so we make no call this issue.
Supported by the dataAgreement +0.77 · in step in 36 of 36 5-year periods
Yield curvetoLeading indexCommon explanation: Cause · same direction
An inverted curve usually signals tight monetary policy and expected rate cuts, and the economy weakens afterwards; inversions have often come before recessions
This issue: Yield curve at 41 (neutral), Leading index at 42 (neutral) — at least one is in the neutral range (40–60), so we make no call this issue.
Weak or inconsistentAgreement +0.22 · in step in 28 of 51 5-year periods
Leading indextoGerman stocksCommon explanation: Knock-on · same direction
Germany relies on export manufacturing and is deeply embedded in global supply chains, so global demand directly affects its exports and investment
This issue: Leading index at 42 (neutral), German stocks at 72 (warm) — at least one is in the neutral range (40–60), so we make no call this issue.
Weak or inconsistentAgreement +0.24 · in step in 34 of 42 5-year periods
Leading indextoGDP growthCommon explanation: Knock-on · same direction
The leading index combines short-term series that turn before the economy does, so its turning points usually come a few months before GDP’s (the OECD aims for a 6–9 month lead)
One of the two has no data yet for this issue.
Weak or inconsistentAgreement +0.39 · in step in 11 of 11 5-year periods
Philly FedtoLeading indexCommon explanation: Knock-on · same direction
Business surveys are among the earliest signals of where the economy is heading
This issue: Philly Fed at 75 (warm), Leading index at 42 (neutral) — at least one is in the neutral range (40–60), so we make no call this issue.
Weak or inconsistentAgreement +0.31 · in step in 42 of 44 5-year periods
Credit spreadtoLeading indexCommon explanation: Cause · opposite direction
Tighter credit holds back investment and hiring
This issue: Credit spread at 9 (cold), Leading index at 42 (neutral) — at least one is in the neutral range (40–60), so we make no call this issue.
Not visible in our dataAgreement −0.02 · in step in 20 of 39 5-year periods
In most periods the two moved the way the common explanation says, but their highs and lows do not line up over the whole history, so overall no relationship is visible.
Leading indextoUS stocksCommon explanation: Knock-on · same direction
Strong economy → company profits → share prices
This issue: Leading index at 42 (neutral), US stocks at 94 (hot) — at least one is in the neutral range (40–60), so we make no call this issue.
Not visible in our dataAgreement −0.03 · in step in 34 of 51 5-year periods
In most periods the two moved the way the common explanation says, but their highs and lows do not line up over the whole history, so overall no relationship is visible.
Leading indextoWorld stocksCommon explanation: Knock-on · same direction
Strong global economy → company profits everywhere → world share prices
This issue: Leading index at 42 (neutral), World stocks at 72 (warm) — at least one is in the neutral range (40–60), so we make no call this issue.
Not visible in our dataAgreement +0.08 · in step in 33 of 45 5-year periods
In most periods the two moved the way the common explanation says, but their highs and lows do not line up over the whole history, so overall no relationship is visible.
Values
Data and sources