U.S. Leading Indicators Continue to Show Weakening Economy

By Ed Frankl

The U.S. economy faces a slowing economy amid growing concerns about the labor market, headwinds from tariffs and a weak manufacturing sector, according to a basket of economic indicators.

The Leading Economic Index, or LEI, published Thursday by research group The Conference Board, fell 0.5% to 98.4 in August, its largest decline since April, after a 0.1% increase in July. Economists polled by The Wall Street Journal expected a 0.2% drop.

"Overall, the LEI suggests that economic activity will continue to slow," said Justyna Zabinska-La Monica, senior manager for business cycle indicators at The Conference Board.

Alongside persistently weak manufacturing new orders and consumer expectation indicators, labor-market developments also weighed on the index, she said.

"A major driver of this slowdown has been higher tariffs, which already trimmed growth in the first half of 2025 and will continue to be a drag on GDP growth in the second half of this year and in the first half of 2026," she added.

While The Conference Board isn't currently forecast a recession, it expects a slowdown in economic growth to 1.6% in 2025, from 2.8% last year. The LEI fell by 2.8% over the six months between February and August, the report said.

The LEI is meant as a predictive index. It is based on 10 components, among them manufacturers' new orders, initial claims for unemployment insurance, building permits for new private housing units, stock prices and consumer expectations, and aims to signal shifts in the business cycle.

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

(END) Dow Jones Newswires

September 18, 2025 10:38 ET (14:38 GMT)