The Conference Board’s Leading Economic Index (LEI) fell by -0.8% in October – its worst monthly drop since the pandemic-induced recession in early 2020. The LEI had been giving a recessionary signal prior to today’s report, but its latest drop solidified this warning as it fell further below its 18-month moving average (top graph). The LEI’s rate of change also declined further to -2.2%, a level which historically has corresponded with an economy already in recession (bottom graph). The Conference Board believes that a recession may already be underway and expects it to last “through mid-2023.” While the timing and duration is still uncertain, the weight of the macroeconomic evidence does strongly suggest that a recession is unavoidable.
Eli Petropoulos, CFA – Sr. Market Analyst