The Leading Economic Index (LEI) posted its first substantial increase since June of last year. Financial markets were a big help as the recent stock market rally made stock prices the largest positive contribution, closely followed by the lift from the interest rate spread. The coincident index declined again, confirming we are still in recession.

Still Stuck in the Mud, But Firmer Ground Ahead

• The awful job market and continued declines in industrial production are weighing heavily on the coincident index.

• The increase in the LEI is a welcome respite after a string of declines in recent months. While we are not about to hang our hat on one positive number, today's turnaround is further evidence that this recession is losing some of its fight. We expect economic growth to return late this year.

Stock Market Rally a Major Boost

• The stock market losses over the last year or so have weighed as much on the LEI as they have on the minds of anyone with a 401(k) invested in equities. But the recent rally helped boost the LEI in April by the largest amount since 1982.

• Consumers are feeling a little bit better about the future. Sentiment is still weak, but we are no longer at record lows and the result was a positive contribution to LEI in April.