A key index of economic indicators that are thought to provide insight into the direction of the economy fell in July, the 16th consecutive monthly decline, and continues to indicate a recession is approaching.
At the same time, a barometer of current conditions indicates that the economy continues to expand.
The Conference Board said its leading economic index fell 0.4 percent in July, in line with Wall Street’s forecasts. Seven of the 10 components of the index fell in July.
Broad, deep, and lasting declines in the index have typically led to recessions. But this year the economy has defied recession predictions and forward-looking indicators, with the economy not only ”
“The leading index continues to suggest that economic activity is likely to decelerate and descend into mild contraction in the months ahead. The Conference Board now forecasts a short and shallow recession in the Q4 2023 to Q1 2024 timespan,” said Justyna Zabinska-La Monica, senior manager of business cycle indicators at the Conference Board.
Zabinksa-La Monica said “weak new orders, high interest rates, a dip in consumer perceptions of the outlook for business conditions, and decreasing hours worked in manufacturing fueled the leading indicator’s” decline in July.
The Conference Board’s measure of current conditions, known as the coincident index, improved in July, rising 0.4 percent.
“The CEI is signaling that we are currently still in a favorable growth environment,” acknowledged Justyna Zabinska-La Monica, senior manager of business cycle indicators at the Conference Board.
The index of lagging indicators, which are supposed to tell us how the economy has fared in the recent past, was unchanged last month.