Conference Board: Leading Economic Index No Longer Signals U.S. Recession
Good News: No Recession on the Horizon
The Conference Board recently announced that the Leading Economic Index (LEI) no longer signals an impending recession for the U.S. economy. This marks the first time since the summer of 2022 that the index has not indicated a recession, despite a decline in January for the 23rd consecutive month.
Decline in Leading Economic Index
Although the index fell 0.4% in January to 102.7, the lowest level since April 2020, the Conference Board remains optimistic. The decline does not necessarily indicate a recession, as six out of its 10 components were positive contributors over the past six-month period.
Economic Activity Outlook
Justyna Zabinska-La Monica, senior manager of business cycle indicators at the Conference Board, emphasized that while the LEI continues to signal headwinds to economic activity, the current situation does not forecast a recession. However, she anticipates near-zero growth in the second and third quarters.
Previous Forecasts and Current Outlook
The Conference Board initially predicted a recession in July 2022. Despite consistently reiterating this forecast in subsequent reports, the organization’s latest release for January suggests a shift in the economic outlook. This change comes amid robust U.S. economic output, job creation, and consumer spending.
Growth in the second and third quarters, however, should be near zero, she said.
“While the declining LEI continues to signal headwinds to economic activity, for the first time in the past two years, six out of its 10 components were positive contributors over the past six-month period,” said Justyna Zabinska-La Monica, senior manager, business cycle indicators at the Conference Board. “As a result, the leading index currently does not signal recession ahead.”
Growth in the second and third quarters, however, should be near zero, she said.
The Conference Board first announced in July 2022 that the index signaled a recession was coming. It had repeated that forecast with each month’s report until Tuesday’s release, which covered January, even as U.S. economic output, job creation and consumer spending all continued at above-trend levels throughout.
