The old rule of thumb was that three consecutive monthly declines in the index signaled a recession within a year, whereas three consecutive increases signaled a recovery. This rule was roughly accurate. It did predict several recessions that failed to materialize, however, and in the case of some correct calls, the lead times were negative—that is, the predictions came after the recession was already established. A reason for false recession predictions could be that although the index contains components representing the manufacturing, consumer, financial, employment, and business investment sectors, it has none that reflect demand for, or investment and employment in, the services industries that now dominate the economy. Moreover, the ....