In Blow to Biden, Leading Economic Indicators Point to Recession ‘Before Yearend’

US President Joe Biden speaks to the press as he stops for ice cream at Baskin Robbins in Portland, Oregon, October 15, 2022. (Photo by SAUL LOEB / AFP) (Photo by SAUL LOEB/AFP via Getty Images)
SAUL LOEB/AFP via Getty

The next recession will likely begin in the very near future, the index of leading economic indicators from the Conference Board showed Thursday.

The Conference Board said its Leading Economic Index (LEI) for the U.S. fell by 0.4 percent in September 2022 to 115.9, after remaining unchanged in August. The index has declined in seven of the last nine months.

“The US LEI fell again in September and its persistent downward trajectory in recent months suggests a recession is increasingly likely before yearend,” said Ataman Ozyildirim, Senior Director, Economics, at The Conference Board. “The six-month growth rate of the LEI fell deeper into negative territory in September, and weaknesses among the leading indicators were widespread.”

The Conference Board forecasts real GDP growth will be 1.5 percent year-over-year in 2022 and slow further in the first half of next year.

The news of the slowdown will likely come as a relief to policymakers at the Federal Reserve, which has been attempting to cool off the labor market and broader economy in an effort to tame inflation. Yet it is blow to President Joe Biden and Democrats, who have insisted that the economy is in a strong position despite high inflation.

“Our economy is strong as hell — the internals of it,” Biden said to reporters during a Baskin-Robbins ice cream stop in Portland a few days ago.

The LEI is down 2.8 percent over the six-month period between March and September 2022, a reversal from its 1.4 percent growth over the previous six months. On average it has declined o.5 percent each month for six months, passing the 0.4 percent average decline over six months that is regarded as a strong signal of an imminent recession.

The LEI is composed from 10 indicators designed to show whether the economy is getting better or worse. Economists had expected it to decline just 0.3 percent.

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