#USA #New York #Conference Board #LEI #CEI

Economic Decline Reflected in Leading Economic Index

In February 2025, the Leading Economic Index (LEI) for the United States, as reported by The Conference Board, experienced a noticeable decline, falling by 0.3% to a total of 101.1 (2016=100). This dip follows a previously recorded 0.2% decrease in January. An analysis of the economic trends reveals that in the six months leading up to February, the LEI decreased by a total of 1.0%, a marked improvement from the previous six-month period, which had seen a steeper decline of 2.1%.

Factors Contributing to the LEI's Decline

According to Justyna Zabinska-La Monica, Senior Manager of Business Cycle Indicators at The Conference Board, the drop in the LEI reflects considerable economic headwinds. One of the primary contributors to this downward trend appears to be a shift in consumer expectations regarding future business conditions, which have taken a decidedly pessimistic turn. This sentiment significantly impacted the Index in February. Furthermore, there was a retreat in manufacturing new orders, which had seen a brief improvement in January but contributed negatively to the LEI's monthly decline in February.

While the LEI presents a bleak outlook, it’s also important to note that both the six-month and annual growth rates, although still in negative territory, have shown an upward trajectory since the end of 2023. This could suggest that the current economic challenges may not be as severe as those faced the previous year. However, with notable policy uncertainty and a decrease in consumer sentiment and spending since the start of 2025, forecasts indicate that the real GDP growth for the US may moderate to around 2.0% throughout the year.

Coincident and Lagging Economic Indexes

Interestingly, the Coincident Economic Index (CEI) for the US marked a slight increase of 0.3% in February 2025, rising to a total of 114.7 (2016=100) after a 0.2% boost in January. Over the six-month period from August 2024 to February 2025, the CEI rose by 1.2%, effectively doubling the 0.6% growth of the preceding six months. Improvements were noted across all four of the CEI's component indicators, which include payroll employment, personal income less transfer payments, manufacturing, trade sales, and industrial production. The most significant contributions to this uptick came from industrial production and personal income.

On the flip side, the Lagging Economic Index (LAG) for the US saw a 0.4% increase in February, marking 119.1 (2016=100). This was a recovery from a previously noted 0.3% increase in January, putting the LAG's six-month change in a positive light, witnessing a 0.2% rise between August and February, rebounding from a 0.2% fall in the prior period.

Future Economic Outlook

With the next release scheduled for April 21, 2025, analysts suggest that while the LEI's decline raises valid concerns, the growth observed in CEI and LAG indexes might indicate underlying resilience in certain aspects of the economy. The ability of the economy to rebound from these declines will heavily depend on resolving ongoing policy uncertainties and improving consumer confidence. Only time will tell if these indexes can sustain their growth momentum or if further declines are imminent.

For more insights, please visit The Conference Board.