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Conference Board Leading Economic Index Declines

The Conference Board Leading Economic Index (LEI) for the United States has shown a downturn, dropping 0.3% in January 2025, settling at 101.5 (2016=100) following a nominal increase of 0.1% in the previous month. This recent figure marks a reversal in the trend observed during the end of 2024, raising questions about the current economic momentum and future projections.

According to Justyna Zabinska-La Monica, Senior Manager at The Conference Board, the LEI's decline mostly reflects a shift in consumer sentiment regarding business conditions. January saw a notable dip in consumer confidence, driven by disappointing labor metrics. There was a decrease in weekly hours worked in manufacturing, which significantly impacted the overall index. Despite the negative trend this month, it is noteworthy that manufacturing orders appear to have found a level of stability after a prolonged period of decline that began in 2022.

On a broader scale, the LEI's performance over the last six months indicates a 0.9% decrease, albeit a more moderate contraction compared to a 1.7% decline observed in the preceding half-year period. Only four out of the ten components that shape the LEI experienced negative performance during January, suggesting that underlying economic fundamentals may still hold some resilience.

Coincident and Lagging Economic Indexes

In contrast to the LEI, the Coincident Economic Index (CEI) increased by 0.3%, reaching 114.3 in January. This increase is imperative as the CEI is closely aligned with current economic conditions, reflecting improvements in key areas such as payroll employment, personal income less transfer payments, and overall industrial production. Over the past six months, the CEI has demonstrated a 1.0% growth rate, paralleling the previous period’s growth rate. The resurgence in industrial production provided the largest boost to the CEI for the second month in a row, further reinforcing the narrative of a potentially stabilizing economic landscape.

Additionally, the Lagging Economic Index (LAG) also reported growth, rising 0.5% to 119.3—this marks the first positive change in its six-month trend since the summer of 2024, which might hint at a gradual recovery even as the LEI faces headwinds.

Economic Forecasts

Looking ahead, The Conference Board maintains a cautiously optimistic economic projection for the U.S. economy, expecting a 2.3% growth in real GDP for 2025, with expectations of stronger expansion in the initial half of the year. As we await the upcoming release scheduled for March 20, 2025, analysts suggest keeping an eye on the dynamics influencing consumer confidence and business activities as these will play critical roles in steering the economic ship in the months to come.

The ten components of the LEI include significant factors such as average weekly hours in manufacturing, initial claims for unemployment insurance, new orders for consumer goods, and stock prices among others—each serving as indicators reflecting the pulse of the economy.

Conclusion

As the U.S. economy navigates through this transitional phase, the latest indices provide valuable insights into both the challenges and the opportunities that lie ahead. Stakeholders across various sectors are advised to remain vigilant and prepare for potential shifts in economic conditions, ensuring tailored strategies to adapt effectively to the changing landscape.