The Conference Board Leading Economic Index declined again in February, falling 0.3% to a reading of 110.0 (2016=100). February’s decrease follows a decline of 0.3% in January.
MarketWatch noted the economy has slowed due to the end of the pandemic stimulus and the effects of high inflation, which has forced the Federal Reserve to raise interest rates. According to MarketWatch, the economy is still expanding, despite the leading index signaling a recession for months.
“The Leading Economic Index for the US fell again in February, marking its eleventh consecutive monthly decline,” said Justyna Zabinska-La Monica, senior manager of business cycle indicators at The Conference Board. “Negative or flat contributions from eight of the index’s ten components more than offset improving stock prices and a better-than-expected reading for residential building permits. While the rate of month-over-month declines in the LEI have moderated in recent months, the leading economic index still points to the risk of recession in the US economy.”
Zabinska-La Monica noted the most recent financial turmoil in the US banking sector is not reflected in the Leading Economic Index data but could have a negative impact on the outlook if it persists.
The Leading Economic Index is now down 3.6% over the six months between August 2022 and February 2023, a steeper rate of decline than its 3.0% contraction over the previous six months.
“Overall, The Conference Board forecasts rising interest rates paired with declining consumer spending will most likely push the US economy into recession in the near term,” Zabinska-La Monica said.