Leading Economic Index Declines Again But 'Doesn't Currently' Signal Recession
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Key TakeawaysThe Leading Economic Index fell again in May but "doesn’t currently signal a recession," The Conference Board said Friday.The decline was driven by drops in new business orders, consumer sentiment, and building permits.The Conference Board predicts U.S. GDP growth will be less than 1% over the second and third quarters.
A closely watched report on economic activity showed a drop in May, although not enough to warn that the U.S. faces a recession. The Conference Board’s Leading Economic Index (LEI) declined 0.5% last month, more than expected and the third straight month of losses. Over the past six months, it fell by 2.0%. Economists polled by Dow Jones Newswires and The Wall Street Journal were anticipating a decline of 0.3% in May.Justyna Zabinska-La Monica, senior manager of The Conference Board’s Business Cycle Indicators, explained that the slide was driven primarily by “a decline in new orders, weak consumer sentiment about future business conditions, and lower building permits.”Index 'Doesn't Currently Signal a Recession'However, she noted that despite being “firmly negative” over the past half year, “the LEI doesn’t currently signal a recession.”Zabinska-La Monica added that because of high inflation and interest rates continuing to impact consumer spending, The Conference Board predicts real U.S. gross domestic product (GDP) growth will slow to an annualized rate of less than 1% in the current and third quarters. Read the original article on Investopedia.
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