U.S. leading indicators point to recession starting soon

July 21, 2023

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An index designed to track turns in U.S. business cycles fell for the 15th straight month in June, dragged down by a weakening consumer outlook and increased unemployment claims, marking the longest streak of decreases since the lead-up to the 2007-2009 recession.

The Conference Board on Thursday said its Leading Economic Index, a measure that anticipates future economic activity, declined by 0.7% in June to 106.1 following a revised decrease of 0.6% in May. The decline was slightly greater than the median expectation among economists in a Reuters poll for a 0.6% decrease.

“Taken together, June’s data suggests economic activity will continue to decelerate in the months ahead,” Justyna Zabinska-La Monica, senior manager of business cycle indicators at The Conference Board, said in a statement. The Conference Board reiterated its forecast that the U.S. economy is likely to be in recession from the current third quarter to the first quarter of 2024.

"Elevated prices, tighter monetary policy, harder-to-get credit, and reduced government spending are poised to dampen economic growth further," Zabinska-La Monica said.

The Conference Board said the contraction in the LEI is accelerating, falling 4.2% over the last six months compared to 3.8% between June and December 2022.