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The Continued Decline of the US Leading Economic Index in September 2025

The latest report from The Conference Board has unveiled that the Leading Economic Index (LEI) for the United States registered a decline of 0.3% in September 2025. This decrease took the index down to 98.3, with the reference year set as 2016. The situation appears grim as this follows a similar dip of 0.3% in August, which was revised upward from a previously reported 0.5% decline. Over a six-month span, between March and September 2025, the LEI has shown a significant downturn of 2.1%, surpassing the contraction of 1.3% noted in the earlier half-year period from September 2024 to March 2025.

Justyna Zabinska-La Monica, a Senior Manager at The Conference Board specializing in Business Cycle Indicators, commented on this persistent downturn, stating, "The US LEI fell again in September, marking a second consecutive decline." A variety of factors attributed to the overall contraction include weakening expectations from both consumers and businesses. Specific subindexes that negatively influenced the LEI encompass consumer expectations, the ISM® New Orders Index, and manufacturers' new orders of consumer goods. Moreover, initial claims for unemployment insurance, albeit inverted, and the yield curve also contributed to this decline.

On a slightly positive note, elements such as stock prices, the Leading Credit Index, and manufacturers' new orders for nondefense capital goods excluding aircraft managed to contribute positively to the index. The report indicates that the LEI may reflect a slowing economy toward the end of 2025 and into early 2026. The contraction in economic activity comes after a robust mid-year consumer spending phase. This trend poses concerns of GDP weakening, particularly following disruptions in the fourth quarter resulting from the federal government shutdown.

The Conference Board’s forecast suggests a modest GDP growth of 1.8% for the entirety of 2025, with expectations of further decline to 1.5% in 2026. This encapsulates the precarious nature of current economic conditions as businesses grapple with ongoing trade tariff adjustments and a noticeable lethargy in consumer spending momentum.

Accompanying the LEI report is the Coincident Economic Index (CEI) for September 2025, which reflected slight growth of 0.1%, standing at 115.1. This follows a month (August) that showed no change, after undergoing a downward revision from an initially reported increase of 0.2%. Between March and September 2025, the CEI rose by 0.3%, a downturn from the 1.1% recorded previously over a coinciding six-month period. Three of the CEI’s component indicators exhibited marginal improvements, with manufacturing and trade sales contributing positively for the months of August and September.

In another component, the Lagging Economic Index (LAG) for the US also increased slightly by 0.1%, reaching 119.6. This follows a similar increment recorded in August, reflecting a total growth of 0.5% during the past six months, a decrease compared to the 0.6% increase observed in the previous half-year span.

Given the delay in the Census Bureau's release of building permit data for September, the LEI series for September 2025 was estimated using a statistical imputation technique based on an autoregressive model. Further details are anticipated in the upcoming release, scheduled for announcement at a later date.

Understanding the Economic Indexes

The Leading Economic Index (LEI) is a predictive tool aimed at indicating forthcoming turning points in the business cycle, typically leading changes by approximately seven months. It comprises ten core components, including average weekly hours in manufacturing, consumer expectations, and stock prices among others.

Conversely, the Coincident Economic Index (CEI) correlates closely with real GDP, reflecting current economic conditions through its four primary components: payroll employment, personal income excluding transfer payments, manufacturing and trade sales, and industrial production.

For a comprehensive understanding of the US's economic landscape and to access detailed data, stakeholders can visit: The Conference Board.

Given the ongoing economic indicators and trends, businesses and consumers alike must remain vigilant and prepared for potential shifts in the market as 2025 unfolds. The ongoing adjustments in economic conditions highlight the delicate balance within the economy and the importance of monitoring these indexes to better navigate the future landscape.