U.S. Economy Facing Further Headwinds, Leading Indicators Say

By Ed Frankl

The U.S. economy faces more challenging conditions ahead, with high inflation, elevated interest rates and rising household debt to weigh on growth in 2024, a monthly indicator said.

The Conference Board said Friday that its Leading Economic Index, or LEI, dipped 0.6% to 101.8 in April, a second-straight month of decline after a 0.3% fall in March.

The index had been expected to fall less, by 0.3%, according to a consensus of economists polled by The Wall Street Journal.

"Another decline in the U.S. LEI confirms that softer economic conditions lay ahead," said Justyna Zabinska-La Monica, senior manager for Business Cycle Indicators at The Conference Board.

Worsening business conditions, weaker new orders and a drop in new building permits fueled the decline, she said. Stock prices also contributed negatively to the index for the first time since October last year.

While components of the index no longer signal a recession, "they still point to serious headwinds to growth ahead," Zabinska-La Monica added.

The LEI is a predictive variable that anticipates turning points in the business cycle by around seven months. The indicator is based on 10 components, among them manufacturers' new orders, initial claims for unemployment insurance, building permits of new private housing units, stock prices and consumer expectations. It is intended to signal swings in the business cycle.

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(END) Dow Jones Newswires

05-17-24 1030ET