The U.S. Conference Board Leading Economic Index (LEI) again declined in August, with a drop of 0.3% to 116.2. This follows a 0.5% decrease (revised) in July and marks six consecutive months of decreases. Over the past six months, the index has fallen 2.7%.
There are ten components driving changes to the LEI for the U.S., and “only initial unemployment claims and the yield spread contributed positively over the last six months — and the contribution of the yield spread has narrowed recently,” said Ataman Ozyildirim, Senior Director, Economics at The Conference Board. He added that the index’s continual decline suggests a potential recession, which The Conference Board anticipates will happen in the coming quarters.
The expectation is that the labor market and economic activity will continue to slow in the coming months. The average workweek has already been shrinking, and businesses typically reduce hours ahead of reducing their workforce. “A major driver of this slowdown,” Ozyildirim added, “has been the Federal Reserve’s rapid tightening of monetary policy to counter inflationary pressures.”
The U.S. Coincident Economic Index inched up 0.1% to 108.7 in August, and the Lagging Economic Index rose 0.7% to 115.4 for the month.