7 Winning Indicators Lift Economic Outlook Out of 4-Year Slump
The Conference Board said Thursday (Aug. 20) that the Leading Economic Index’s (LEI) six-month growth rate turned positive for the first time in more than four years.
The LEI’s six-month growth rate for January to July was positive, with an increase of 0.2%, while that for the previous six-month period was negative, with a decline of 1.3%, the organization said in a press release.
“With the most recent gains, the LEI’s six-month growth rate turned positive for the first time in more than four years, suggesting moderate growth ahead,” Justyna Zabinska-La Monica, senior manager, business cycle indicators at The Conference Board, said in the release. “The economy should keep expanding, but growth is expected to be driven by business investments in AI, while the higher cost of living may reduce consumer spending, especially by lower- and middle-income households. Consequently, The Conference Board continues to forecast real GDP growth of 1.9% in 2026 and 1.9% in 2027.”
Zabinska-La Monica said that July marked the fourth increase in the LEI in the past six months.
The LEI inched up 0.2% in July, with seven of the index’s 10 components making gains, according to the release.
The positive result in July marked a turnaround from June, when the LEI saw an upwardly revised decline of 0.1%. The figure originally reported for June was a decline of 0.2%, PYMNTS reported when the initial data was released.
The LEI is comprised of multiple independent indicators and is designed to anticipate turning points in the business cycle by about seven months, according to the release.
Seven of the 10 components of the LEI were positive in July. The month’s gains were led by jobless claims and building permits. The interest rate spread, Leading Credit Index, ISM New Orders Index, S&P 500 Index and manufacturers’ new orders for consumer goods and materials were also up in July, per the release.
Average weekly hours in manufacturing remained unchanged.
The other two components of the LEI — consumer expectations for business conditions and manufacturers’ new orders for nondefense capital goods excluding aircraft orders — were down in July. Consumer expectations continued to be a “notable drag” on the overall index, but this was more than offset by other components of the index, per the release.
PYMNTS reported Monday (Aug. 17) that consumer sentiment has darkened. The University of Michigan’s preliminary sentiment index dropped to 51 in August from 55.2 in July.
