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Leading Economic Indicators Continue to Point to a Recession

The Leading Economic Index (LEI) fell by 0.3% in February to 11, the same percent decline as in January, according to the latest release from The Conference Board.

February’s LEI was down 3.6% over the six-month period between August 2022 and February 2023—a steeper rate of decline than its 3% contraction over the previous six months, February – August 2022.

“The LEI for the U.S. fell again in February, marking its eleventh consecutive monthly decline,” said Justyna Zabinska-La Monica, senior manager of Business Cycle Indicators for The Conference Board. “Negative or flat contributions from eight of the index’s 10 components more than offset improving stock prices and a better-than-expected reading for residential building permits. The most recent financial turmoil in the U.S. banking sector is not reflected in the LEI data, but could have a negative impact on the outlook if it persists.”

The Coincident Economic Index increased by 0.1% to 109.8, following an increase of 0.2% in January. The index is now up 0.6% over the six-month period between August 2022 and February 2023—slightly lower than the 0.7% growth it recorded over the previous six months. 

The Coincident Economic Index’s indicators—payroll employment, personal income less transfer payments, manufacturing trade and sales, and industrial production—are included among the data to determine a recession.

The Lagging Economic Index saw an increase of 0.2% to 118.5 after seeing a 0.1% increase in January. The index is up 2.1% over the six-month period from August 2022 to February 2023, less than half the growth rate of 4.6% over the previous six months.

“While the rate of month-over-month declines in the LEI have moderated in recent months, the leading economic index still points to risk of recession in the U.S. economy,” concluded Zabinska-La Monica. “Overall, The Conference Board forecasts rising interest rates paired with declining consumer spending will most likely push the U.S. economy into recession in the near term.”

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