#United States #New York #Consumer Confidence #Economic Forecast #Leading Economic Index

The Decline of the US Leading Economic Index in June 2025

The Conference Board Leading Economic Index® (LEI) for the United States registered a decline of 0.3% in June 2025, bringing the index down to 98.8, based on the 2016 baseline of 100. This drop follows a stagnant month in May, which has since been adjusted to reflect a slight uptick from an initial report indicating a -0.1% change. This trends shows a more pronounced downturn compared to the previous half-year, in which the LEI decreased by 2.8% in the first half of 2025, sharply contrasting with a smaller decline of -1.3% during the latter half of 2024.

Justyna Zabinska-La Monica, Senior Manager of Business Cycle Indicators at The Conference Board, commented, "The LEI's decline for the second month in a row suggests profound underlying challenges for the economy. While stock prices experienced a positive surge, this alone was inadequate to alleviate consumer pessimism, weak manufacturing orders, and an increase in unemployment insurance claims for the third consecutive month."

The downturn in the LEI is troubling as it is designed as an anticipatory metric, foreshadowing potential shifts in economic performance. It is noteworthy that the LEI's growth rate over the preceding six months has diminished, with the diffusion index—a crucial measure indicating the breadth of activity—remaining below 50. This signals a recessionary trend for the third month in a row.

Despite the concerning data, The Conference Board has refrained from officially forecasting a recession, although they do predict a significant slowdown in economic growth for 2025 compared to 2024. The revised estimates for real GDP growth are now at 1.6%, a stark drop that can be attributed partly to the widening impacts of tariffs and inflation on consumer spending, particularly in the latter half of the year.

In contrast to the LEI, the Coincident Economic Index® (CEI) saw a slight increase of 0.3% in June 2025, elevating it to 115.1. This follows two months of no change in this index. The increase in the CEI, which reflects current economic activity, was somewhat reassuring, as it rose by 0.8% in the first half of the year, though down from the 1.0% increase seen in the previous six months.

The CEI's improvement can be attributed to key factors including payroll employment, personal income, and overall industrial production. All four components of the CEI made gains in June.

Interestingly, the Lagging Economic Index® (LAG) remained unchanged at 119.9 in June 2025, following a marginal increase of 0.4% in May. Meanwhile, the LAG's growth rate demonstrated a contrast of 1.4% from the end of 2024 to June 2025, bouncing back from a prior decrease of -0.8% during the second half of 2024.

Moving forward, economic observers are keenly awaiting the upcoming release of new economic indicators, scheduled for August 21, 2025, which will provide additional insights into the economic trajectory of the country. The data from LEI, CEI, and LAG together lay the groundwork for a nuanced understanding of the business cycle's peaks and troughs, providing stakeholders with essential information for strategic planning.

While outward indicators such as stock prices can paint a positive picture, the underlying metrics indicate that consumers and businesses should brace for a more tempered economic environment moving forward. With essential indicators pointing towards cautious sentiment, the unfolding economic landscape will require careful monitoring and perhaps decisive action to mitigate long-term downturn effects.