Leading economic index drops 0.6% in April
The numbers: The leading indicators for the U.S. economy fell in April for the second month in a row and pointed to "serious headwinds to growth."
The index of leading economic indicators sank 0.6% last month, the privately run Conference Board said Friday.
The leading index is a gauge designed to show whether the economy is getting better or worse. Economists polled by the Wall Street Journal had forecast a 0.3% decline in April.
The leading index had risen in February to mark the first increase in two years. It was the third-longest negative stretch ever.
The other two times the index experienced such large declines, a recession ensued. But the pandemic and its aftermath has partly severed typical economic patterns and the U.S. has continued to grow at an above-average rate.
Key details: The leading index declined mainly because of weaker business orders, fewer permits to build new homes and a decline in stock prices last month. Stocks have since rebounded, however, to fresh record highs.
Big picture: The economy slowed in the first quarter after heady growth in the second half of 2023. It's unlikely speed up much until inflation tapers off and the Federal Reserve cuts interest rates.
A recession also appears unlikely, though. A strong labor market, characterized by steady hiring, low layoffs and low unemployment, means people have the means to spend to keep the economy growing.
Looking ahead: While the index "no longer signal a forthcoming recession, they still point to serious headwinds to growth ahead," said Justyna Zabinska-La Monica, senior manager of business-cycle indicators at the Conference Board.
"Indeed, elevated inflation, high interest rates, rising household debt, and depleted pandemic savings are all expected to continue weighing on the US economy in 2024."
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