The Conference Board Leading Economic Index (LEI), which measures indicators of significant turning points in the business cycle and where the economy is headed in the near term, posted yet another decline for the month of February, to the tune of 0.3%. After a 0.2% decline in January (upwardly revised from 0.3%), the index continued its long-term downward trajectory.
The index also declined on a six-month basis (the six months preceding February 2025), by 1%, which was less than half the rate of the 2.1% downward movement the index experienced in the six months preceding those (February 2024 – August 2024).
“The U.S. LEI fell again in February and continues to point to headwinds ahead,” commented Justyna Zabinska-La Monica, senior manager at The Conference Board, in a statement. “Consumers’ expectations of future business conditions turned more pessimistic. That was the component that weighed down most heavily on the Index in February. Manufacturing new orders, which improved in January, retreated and were the second-largest negative contributor to the Index’s monthly decline.”
Zabinska-La Monica made sure to keep February’s reading in the broader context of the index’s continually slowed rate of decline, stating that there is an upward trend in the numbers, despite lower consumer sentiment.
“On a positive note, the LEI’s six-month and annual growth rates, while still negative, have remained on an upward trend since the end of 2023, suggesting that headwinds in the economy as of February may have moderated compared to last year,” she continued. “However, given substantial policy uncertainty and the notable pullback in consumer sentiment and spending since the beginning of the year, we currently forecast that real GDP growth in the U.S. will slow to around 2% in 2025.”
The uncertainty reflected in the LEI comes as pending home sales have also experienced downward movement, indicating that consumers may not have the stomach for the conditions in the country at large to make big-ticket purchases. This also comes as the Federal Reserve chose not to change interest rates once again yesterday, also lowering its projections for GDP in the medium term.
The Conference Board Coincident Index (CEI), which measures where the U.S. economy is currently, increased by 0.3% in February to a reading of 114.7, following a 0.2% increase in January. This was a 1.2% increase for the six months preceding February, a doubling of the 0.6% growth seen in the six months prior to those (February 2024 – August 2024).
The CEI’s component indicators—payroll employment, personal income less transfer payments, manufacturing and trade sales and industrial production—are part of the data used to determine recessions in the United States. All four indicators improved in February, led by industrial production. This indicator was followed in order by personal income less transfer payments, manufacturing and trade sales and payroll employment.
The 10 components of the Leading Economic Index® for the U.S. are:
- Average weekly hours in manufacturing
- Average weekly initial claims for unemployment insurance
- Manufacturers’ new orders for consumer goods and materials
- ISM® Index of New Orders
- Manufacturers’ new orders for nondefense capital goods excluding aircraft orders
- Building permits for new private housing units
- S&P 500® Index of Stock Prices
- Leading Credit Index™
- Interest rate spread (10-year Treasury bonds less federal funds rate)
- Average consumer expectations for business conditions
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