US Leading Economic Index® Continued its Decline in June, The Conference Board Reports

The Conference Board, a non-partisan, not-for-profit think tank founded in 1916, released Thursday (7-20-23) its Leading Economic Index® (LEI) for the US in June. According to the report, the LEI declined 0.7% to a reading of 106.1 (2016=100) in June, after posting a decline of 0.6% in May. The LEI has dropped 4.2% over the six-month period from December 2022 to June—a much steeper rate of decline than its 3.8% contraction over the previous six-month period (June 2022–December 2022).

The Conference Board Coincident Economic Index® (CEI) remained unchanged at 110.0 (2016=100) in June, after increasing 0.2% in May. The CEI has increased by 0.6% over the six-month period from December 2022 to June—down from the 1.1% growth it recorded over the previous six months. The CEI’s component indicators—payroll employment, personal income less transfer payments, manufacturing trade and sales, and industrial production—are included among the data used to determine recessions in the US. Recent data for industrial production have contributed negatively to the coincident index, offsetting gains from employment, sales, and income growth.

The Conference Board Lagging Economic Index® (LAG) was unchanged at 118.4 4 (2016=100) in June, after improving 0.1% in May. The LAG has increased by 0.1% over the six-month period from December 2022 to June—substantially less than the growth rate of 3.0% over the previous six-month period.

Adding additional background and her analysis to the report, Senior Manager, Business Cycle Indicators at the Conference Board Justyna Zabinska-La Monica said:

“The US LEI fell again in June, fueled by gloomier consumer expectations, weaker new orders, an increased number of initial claims for unemployment, and a reduction in housing construction. The Leading Index has been in decline for fifteen months—the longest streak of consecutive decreases since 2007–08, during the runup to the Great Recession. Taken together, June’s data suggests economic activity will continue to decelerate in the months ahead. We forecast that the US economy is likely to be in recession from 2023Q3 to 2024Q1. Elevated prices, tighter monetary policy, harder-to-get credit, and reduced government spending are poised to dampen economic growth further.”