Racing during the Kentucky Derby at Churchill Downs Racetrack. (Photo: AP)

There are many ways to measure the strength of the economy, so in the lead-up to Saturday’s running of the Kentucky Derby, why not the prices paid at auction for thoroughbred horses?

In his new LPL Financial weekly market commentary, LPL’s chief market strategist Jeffrey Kleintop wrote that the prices horse buyers pay reflect their general willingness to take risks, and this is a good indicator of the strength of the economy.

This year, favorable economic and market conditions are encouraging horse owners, as well as corporate leaders and investors, to take the risk and invest, Kleintop wrote.

The median price of two-year-old thoroughbreds in training at this year’s April auction hit an all-time high of $200,000, up more than 30% from last year, suggesting that a new environment of risk taking by horse owners may be emerging.

Thoroughbreds are costly and speculative investments, Kleintop wrote. Sales of the thoroughbred horse auctioneer Keeneland fell during the recessions of 1990–’91, 2001 and 2008–’09, and then rebounded as conditions improved.

The lingering weakness in thoroughbred sales over the past five years, 2009–’13, coincided with slack in the global growth environment. The pace of business spending on new buildings to expand employees and output was similarly weak.

Now, the environment for investment and risk-taking by business leaders appears to be improving, just as it is for horse owners.

In recent years, Kleintop wrote, the LPL Financial Current Conditions Index, which has measured 10 real-time economic and market conditions since 2009, remained in a range of 200 to 250, indicating conditions for slow, but steady, growth.

Last week, however, the CCI leapt to 269, a post-recession high. 

“A breakout in economic growth from the steady, but sluggish, pace of the past few years is necessary to support stock market valuations that rose in 2013 in anticipation of better growth ahead,” Kleintop wrote.

“The breakout in the CCI is another sign that the animal spirits of business leaders and investors may be re-emerging, resulting in more investment that may herald better growth.”