Humpty Dumpty Chronicles Episode 2 : LEI/CEI Ratio (Say WHAT??)

We Might Really, Really Need a Rate Cut… But For Reasons Nobody’s Talking About.

Out of all the bad ideas I could’ve picked for the next round of the Humpty Dumpty Chronicles, I picked this one.

And let’s be honest — this one isn’t just bad… it’s really bad.

I could’ve written about Super Bowl commercials, or Taylor Swift economics, or the housing shortage, or even why every dealership is suddenly trying to sell flooring like it’s Bitcoin.

But no. I picked the LEI/CEI Ratio.

Yes — if you’re thinking “Isn’t that the thrilling plot twist from Chapter 14 of the Federal Reserve bedtime story?” you’d be right.

But stick with me — this is exactly why I chose it.

Because hidden smack in the middle of an article that most readers skimmed past (like kale salad at Thanksgiving) is one of the most important warnings for small and midsize businesses — especially Kitchen & Bath Dealers who naturally fit that model

And most importantly:

It explains exactly why some dealers are going to be Humpty Dumpty, and why a handful of others are going to scale that wall faster than Spider-Man on espresso.

So What Did The Article Actually Say?

The WSJ title looked sensational:

“We Might Really, Really Need a Rate Cut.”

But that’s not the point.

The real point is in the chart buried in the middle — comparing something called the Leading Economic Index (LEI) to the Coincident Economic Index (CEI).

Here’s the fun, fast translation:

· CEI = What the economy is doing right now

· LEI = What the economy is about to do

When the future looks worse than the present, the ratio drops below 1.0.

And guess what?

It just did.

And the last time it did that?

Late 2007, right before the economy belly-flopped into 2008.

Sounds like a chart you actually want to pay attention to, huh?

Now Let’s Make That Practical

Right now:

· People aren’t panicking.

· Unemployment isn’t spiking.

· The stock market isn’t melting.

But the forward view says momentum is slipping.

And small and midsize businesses feel that first. (Yes, Kitchen & Bath Dealers are front-row seats.)

This doesn’t mean doom. It means the smart dealers shift gears BEFORE everyone else finds the brake pedal.

Which Brings Us to Humpty Dumpty II

Dealers are about to split into two very distinct camps:

Camp 1: The Wall Sitters

· “This industry is different.”

· “We’re a people business.”

· “AI doesn’t matter here.”

· “Customers just want service.”

(Translation: “Fear > Logic”)

Camp 2: The Ladder Grabbers

· They get efficient.

· They protect their margins.

· They spend MORE time with customers — not less.

· They run their business with modern tools.

· They gain traction while others freeze.

In the end?

One camp will be explaining what happened. The other camp will be too busy growing to care.

And THAT Is Why I Picked This Topic

It looks you squarely in the eyes and speaks the truth. No hogwash!

The LEI/CEI ratio is the earliest flashing warning light that most business owners have never heard of before. (me included) But it fits the story line to a tee. The jobs picture is not going to get better because of rate cuts. Most other industries will invest in AI and it’s efficiency and not head count.

The Humpty Dumpty moment happens when everyone waits because “things look fine right now.”

But the smartest dealers act while things are fine.

And that’s exactly when the advantage is biggest.

The Best One-Liner to Close This Chapter

Rate cuts might be coming, not because inflation is too high… but because small and midsize businesses are in the early stages of getting squeezed.

And the ones who survive will be the ones who innovate before the crowd knows what it needs to do.

Stay tuned for Humpty Dumpty Chronicles III… where incredibly bad blog concepts continue to reveal hopefully good insights.