The leading economic index sank again in September, the 18th consecutive month of declines for the gauge thought to predict future economic conditions.
The Conference Board said its index of leading indicators fell 0.7 percent in the month. The index is made up of ten components that are thought to indicate the future direction of the economy.
“The LEI for the US fell again in September, marking a year and a half of consecutive monthly declines since April 2022,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board. “In September, negative or flat contributions from nine of the index’s ten components more than offset fewer initial claims for unemployment insurance. Although the six-month growth rate in the LEI is somewhat less negative, and the recession signal did not sound, it still signals risk of economic weakness ahead.”
The pace of decline has slowed, which is why Zabinksa-La Monica says the recession signal did not sound in this report. The index is down 3.4 percent over the six-month period between March and September 2023, an improvement from its 4.6 percent contraction over the previous six months.
Even though the recession signal was not triggered, the Conference Board thinks we are headed into a recession early next year.
“So far, the US economy has shown considerable resilience despite pressures from rising interest rates and high inflation. Nonetheless, The Conference Board forecasts that this trend will not be sustained for much longer, and a shallow recession is likely in the first half of 2024,” Zabinska-La Monica said.
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