Economic Barometer Warns That A US Recession Could Come Soon
- A key barometer for the health of the economy continues to flash a recession warning sign, indicating a downturn is in store for the US in the near future. A growing number of business leaders agree the US economy is getting worse.
- America is not in an official recession but the Conference Board’s Leading Economic Index declined for the 10th consecutive month, falling in December by 1% to 110.5, according to a report released Monday by the business think tank. Economists were expecting a decline of 0.7%, according to Refinitiv. On average, the index peaks about a year ahead of a recession, according to the Conference Board. The index appears to have peaked in February 2022, the Conference Board noted.
- “There was widespread weakness among leading indicators in December, indicating deteriorating conditions for labour markets, manufacturing, housing construction, and financial markets in the months ahead,” Ataman Ozyildirim, the Conference Board’s senior director of economics, said in a statement. Seven of the index’s 10 components declined in December, and the trajectory of the Leading Economic Index (LEI) continues to signal a recession, according to the report.
- US economic activity has shown signs of slowing in recent months as the Federal Reserve has been raising the interest rate to bring down inflation. Fed officials say they’re seeing progress on inflation but that restrictive monetary policy — and future hikes — will continue to occur.
- The next two-day meeting for the Fed’s rate-setting committee starts January 31. Expectations are for the central bank to raise rates by a quarter point, according to the CME FedWatch tool.