The US Leading Economic Index (LEI) from the Conference Board is a widely recognized leading indicator of the U.S. economy. For over 2 years, this indicator has been warning of a probable path into recession… and has been wrong.
This morning’s March release showed the LEI accelerated to the downside – falling 0.7 points from the prior month and suffering its largest drop since October 2023. It has now declined in 35 of the last 37 monthly readings (graph below). Over these past two years, the strength in the stock market has been one of the most positive contributors to the Index. However, in this latest reading stock prices were one of the largest negative headwinds, along with falling consumer expectations. This renewed acceleration in the LEI’s downward trend raises the question whether this tried-and-true recession warning indicator could FINALLY prove right.
