The Conference Board’s (TCB) Leading Economic Index (LEI), which signals potential inflection points in the economy and where growth is headed in the near term, has triggered a recession signal as the index continues to fall.
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In August, the LEI fell by 0.5%, the largest monthly decline since April. The LEI factors in several financial and non-financial components, such as the interest rate spread, initial jobless claims, building permit volume, and credit data.
LEI Decline Signals Recession Risk
Through the six months ended August, the LEI has now declined by 2.8%, triggering a recession signal in the process. The signal is triggered when the LEI’s annualized six-month growth rate drops below 4.1% and when the six-month diffusion index reaches or drops below 50. The diffusion index tracks the extent of decline within the LEI’s components.
“A major driver of this slowdown has been higher tariffs, which already trimmed growth in H1 2025 and will continue to be a drag on GDP growth in the second half of this year and in H1 2026,” said TCB Senior Manager, Business Cycle Indicators Justyna Zabinska-La Monica.
At the same time, TCB isn’t calling for a recession just yet, as the LEI has flashed false recession signals in the past. However, the organization expects 2025 gross domestic product (GDP) growth of 1.6%, down from 2.8% in 2024.
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