A recent report by the Conference Board reveals that leading indicators for the U.S. economy experienced a sharper decline than anticipated in July.
The leading economic index (LEI) dropped by 0.6 percent in July, following a 0.2 percent decrease in June. Economists had predicted a more modest decline of 0.3 percent.
Over the six months ending in July 2024, the LEI fell by 2.1 percent, marking a less severe contraction compared to the 3.1 percent decline observed from July 2023 to January 2024.
"The LEI continues to decline month-over-month, yet the six-month annual growth rate no longer indicates an impending recession," stated Justyna Zabinska-La Monica, Senior Manager of Business Cycle Indicators at the Conference Board.
"The widespread weakness among non-financial components in July — notably the decline in new orders, persistently weak consumer expectations regarding business conditions, and softer building permits and manufacturing hours — contributed to the drop, alongside the still-negative yield spread," she elaborated.
Additionally, the coincident economic index remained unchanged in July after a 0.2 percent rise in June. It increased by 0.9 percent over the six months from January to July 2024, outpacing the 0.5 percent growth observed in the previous six-month period.
The lagging economic index saw a slight decrease of 0.1 percent in July, following a 0.2 percent uptick in June. Its six-month growth rate declined to 0.6 percent for the period ending in July 2024, compared to the 1.1 percent growth during the preceding six months.
"These figures continue to point to headwinds in economic growth moving forward," noted Zabinska-La Monica. "The Conference Board projects U.S. real GDP growth to decelerate over the coming quarters as consumers and businesses reduce spending and investment."
She added that U.S. real GDP is expected to grow at an annualized rate of 0.6 percent in Q3 2024 and 1 percent in Q4.
