U.S. Economic Momentum Slows, Leading Indicators Say

By Ed Frankl

An indicator of the U.S. economic outlook eased back in March, reversing gains in the previous month with growth set to cool in the months ahead.

The Conference Board said Thursday that its Leading Economic Index, or LEI, dipped 0.3% to 102.4 in March, having risen 0.2% in February.

The index had been expected to fall less, by a marginal 0.1%, according to a consensus of economists polled by The Wall Street Journal.

More negative views of interest rates, new building permits, consumers' outlook on business conditions and new orders, as well as higher unemployment insurance claims, drove March's decline, said Justyna Zabinska-La Monica, senior manager for Business Cycle Indicators at The Conference Board.

"Overall, the index points to a fragile - even if not recessionary outlook for the U.S. economy," she added.

Over the period between September 2023 and March this year the LEI contracted 2.2%, smaller than the 3.4% over the six months prior.

The Conference Board said it now forecasts the economy to cool in the second half of this year, after the rapid expansion at the end of 2023.

"Rising consumer debt, elevated interest rates, and persistent inflation pressures continue to pose risks to economic activity in 2024," Zabinska-La Monica said.

The LEI is a predictive variable that anticipates turning points in the business cycle by around seven months. The indicator is based on 10 components, among them manufacturers' new orders, initial claims for unemployment insurance, building permits of new private housing units, stock prices and consumer expectations. It is intended to signal swings in the business cycle.

Write to Ed Frankl at edward.frankl@wsj.com

(END) Dow Jones Newswires

April 18, 2024 10:39 ET (14:39 GMT)

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