The Conference Board was established as a means of bringing together business leaders from different industries to objectively discuss policy issues and to find solutions to existing problems. It was explicitly created as non-partisan organization that refrained from promoting the products of particular firms or industries and from distributing advertising or any form of "political propaganda."

It has expanded the scope of its activity significantly since the early 1900s. Two of its more important current functions are compiling business cycle indicators (leading, coincident, and lagging economic indicators) and generating the Consumer Confidence Index.

Business Cycle Indicators

• Leading Economic Indicator: This is a composite of ten distinct economic measures that generally lead business-cycle movements by three to twelve months. This is the most widely publicized, and most useful, of the three business cycle indicators compiled by The Conference Board. The ten measures included in this composite index are: (1) manufacturers' new orders for consumer goods and materials, (2) an index of vendor performance, (3) manufacturers' new orders for nondefense capital goods, (4) the Standard & Poor's 500 index of stock prices, (5) new building permits for private housing, (6) the interest rate spread between U.S. Treasury bonds and Federal Funds, (7) the M2 real money supply, (8) average workweek in manufacturing, (9) an index of consumer expectations, and (10) average weekly initial claims for unemployment insurance.


• Coincident Economic Indicator: This is a composite of four economic measures that rise and fall with current business-cycle conditions. The four coincident indicators that make up the composite index are: (1) the number of employees on nonagricultural payrolls, (2) industrial production, (3) real personal income (after subtracting transfer payments), and (4) real manufacturing and trade sales.


• Lagging Economic Indicator: This is a composite of seven economic measures that generally lag business-cycle movements by three to twelve months. The seven lagging indicators included in the composite index are: (1) labor cost per unit of output in manufacturing, (2) the average prime interest rate, (3) the amount of outstanding commercial and industrial debt, (4) the Consumer Price Index for services, (5) consumer credit as a fraction of personal income, (6) the average duration of unemployment, and (7) the ratio of inventories to sales for manufacturing and trade.

Consumer Confidence Index

The monthly Consumer Confidence Survey is conducted with a randomly selected, representative sample of 5,000 U.S. households. Each household is asked five simple questions dealing with:

1. An appraisal of current business conditions.
2. Expectations of business conditions in six months.
3. An appraisal of current employment conditions.
4. Expectations of employment conditions in six months.
5. Expectations regarding total family income in six months.