Significant Decline in the US Leading Economic Index for April 2025 Raises Concerns

In a concerning turn of events, the Conference Board has reported that the Leading Economic Index® (LEI) for the United States experienced a notable decrease of 1.0% in April 2025, landing at a value of 99.4 (with 2016 serving as the base year at 100). This marked decline comes in addition to a previous downward revision showing a 0.8% decrease in March. Moreover, the LEI has shown a steep reduction of 2.0% over the six-month period concluding in April, reflecting the same rate of decline observed during the previous six-month timeframe (from April to October 2024).

Justyna Zabinska-La Monica, who serves as the Senior Manager for Business Cycle Indicators at The Conference Board, voiced concerns over the stark monthly decline of the LEI. She noted that the index's steep drop in April 2025 marks the most significant decline since March 2023, a month that raised fears of a potential recession which ultimately did not manifest.

A closer analysis of the LEI’s components reveals a pervasive deterioration. Alarmingly, consumer expectations have been continuously sliding into pessimism each month since January 2025. Key indicators such as building permits and average working hours in manufacturing became negative in April. This pervasive weakness, especially over the six-month period, presents a cautionary trend that signals future uncertainty for economic growth.

Despite this downturn, it's intriguing that the LEI did not dip to a level that would typically trigger a recession signal. The Conference Board currently projects that the U.S. real GDP is poised to grow by 1.6% in 2025, down from a more robust 2.8% in 2024. Additionally, with tariffs set to have a more pronounced impact on the economy in the third quarter, the situation may become even more complicated as businesses adjust to new economic realities.

On a different note, the Conference Board's Coincident Economic Index® (CEI) experienced a slight increase of 0.1% in April, bringing it to 114.8. This follows a 0.3% rise the previous month. Notably, the CEI has grown by 1.1% over the six months up to April, showcasing a slight improvement from its earlier growth rate of 0.9% from October 2024 to April 2025. The CEI's four component measures—payroll employment, personal income less transfer payments, manufacturing and trade sales, and industrial production—play a critical role in assessing the economy's current conditions and are instrumental in determining recessions in the U.S. economy. Remarkably, while industrial production showed little variation compared to the previous month, it contributed the least to the index in April.

An encouraging sign comes from the Lagging Economic Index® (LAG), which rose by 0.3% to 119.3 in April, reversing a 0.1% decrease in March. This index demonstrated a positive six-month growth rate of 0.8% from October 2024 to April 2025, contrastingly showing improvement after a prior decline of 0.8% during the preceding six-month period.

Moving forward, the next release of these pivotal economic indicators is set for June 20, 2025, at 10 A.M. ET, providing further insights into the trends shaping the U.S. economy and enhancing our understanding of the current economic landscape.

In summary, while the LEI's plunge in April raises red flags about the economy's health, the performance of the coincident and lagging indexes presents a mixed picture, suggesting that the U.S. economy is navigating a challenging landscape that could require careful monitoring and strategic adjustments by businesses and policymakers alike.