Decline in the Conference Board Leading Economic Index Signals Slowing Growth and Economic Uncertainty

Conference Board's Leading Economic Index Declines in March 2025

The latest data from the Conference Board highlights a notable decline in the Leading Economic Index (LEI) for the US, which dropped by 0.7% in March 2025, marking a significant point of concern for economists and market analysts. This decrease brought the LEI down to a value of 100.5 (with 2016 as the base year), after witnessing a minor dip of 0.2% in February, which was later revised from a previous estimation of -0.3%.

The LEI is a crucial predictor of potential shifts in economic performance, often indicating peaks and troughs well in advance. In this recent report, the decrease in March was attributed primarily to three significant components: a marked drop in consumer expectations, a substantial decline in stock prices—the largest since September 2022—and a softening in new manufacturing orders. Such conditions suggest a growing sense of economic uncertainty, exacerbated by impending announcements regarding tariffs that may further complicate the fiscal landscape.

Justyna Zabinska-La Monica, a Senior Manager at the Conference Board, stated, "The US LEI for March pointed to slowing economic activity ahead." However, despite the declining trend, the data currently does not indicate the onset of a recession. Nonetheless, the Conference Board has adjusted its forecast for US GDP growth in 2025, reducing it to 1.6%, a figure that falls below the economy's potential growth rate. This adjustment reflects the adverse impact that ongoing trade tensions are likely to have on inflation rates, supply chain stability, investment levels, consumer spending, and overall labor market strength.

Alongside the LEI, the Conference Board also reported an increase in the Coincident Economic Index (CEI) for the US, which rose by 0.1% in March to 114.4. This figure followed a 0.3% increase in February and indicates that while some areas of the economy are expanding, the growth rate is cautious. Over the six-month period from September 2024 to March 2025, the CEI saw a total rise of 0.8%, which remains a positive sign against the backdrop of larger economic challenges.

The CEI is computed from four critical indicators: payroll employment, personal income minus transfers, manufacturing and trade sales, and industrial production. Notably, industrial production saw its first decline since November 2024, contributing to a mix of signals that highlight the fragile state of current economic conditions.

Meanwhile, the Lagging Economic Index (LAG) fell by 0.1% to 119.1 in March after a 0.3% rise in February. However, over the six-month horizon, the LAG displayed positive growth at 0.7%, which is a reversal from a previous decline of 0.7%. This mixed bag of economic indicators has created an environment of caution, as stakeholders closely monitor developments leading up to the next economic indexes release scheduled for May 19, 2025.

The complexity of the current economic landscape is further portrayed by the ten components that comprise the LEI. These include average weekly hours in manufacturing, new manufacturing orders, building permits for private housing units, stock price indices, and consumer expectations among others. Each of these factors plays a pivotal role in shaping predictions and responses by policymakers and investors.

As the month progresses, the assessments and forecasts derived from these indexes will be vital for businesses, investors, and consumers alike. Increased trade tensions and global economic shifts necessitate careful navigation through potential economic disruption, making the upcoming data releases ever more crucial for understanding where the economy may be headed in the months to come.