The economic barometer warns of a recession in the United States soon

Minneapolis
CNN
–

The main gauge of the health of the economy continues to sound a recessionary warning signal, which indicates a downturn in the United States in the near future. A growing number of business leaders agree that the US economy is getting worse.

America isn’t officially in a recession — not yet, anyway — but the Conference Board’s leading economic indicator is down for the 10th straight month, falling in December by 1% to 110.5, according to a report released Monday by a business think tank. Economists had expected a 0.7% decline, according to Refinitiv.

On average, the index peaks a year before a recession, according to the Conference Board. The index appears It peaked in February 2022Conference board note.

“There was widespread weakness among the main indicators in December, which indicates deteriorating conditions in the labor markets, manufacturing, housing construction and financial markets in the coming months,” said Ataman Özeldirim, Senior Director of Economics at The Conference Board, in a statement.

Seven of the index’s 10 components declined in December, and the LEI path still points to recession, according to the report.

“Overall economic activity is likely to turn negative in the coming quarters before picking up again in the last quarter of 2023,” Özeldirim said.

The official arbiter of a recession is a panel of economists at the National Bureau of Economic Research, who take a range of economic indicators into consideration before making a decision — which can sometimes happen after a downturn has already begun.

But about 52% of economists surveyed by the National Association for Business Economics think there is more than a 50-50 chance the US will enter a recession this year, according to NABE’s latest survey of business conditions released Monday morning.

“For the first time since 2020, more respondents expect decreased employment rather than increased employment at their companies in the next three months,” NABE President Julie Coronado said in the report. Fewer respondents than in recent years expect their companies to increase capital spending in the same period.

US economic activity has shown signs of slowing in recent months as the Federal Reserve unleashed a barrage of interest rate increases to bring down inflation.

Federal Reserve officials They say they see progress on inflation But this restrictive monetary policy – and future hikes – will continue to happen.

The next two-day meeting of the Fed’s rate-setting committee begins on January 31. Expectations are for the central bank to raise interest rates by a quarter point, according to CME FedWatch.

Before this meeting, the Fed will have additional economic data to review: the fourth-quarter GDP data and the personal consumption expenditures report (which contains the Fed’s preferred inflation measure) will be released on Thursday and Friday, respectively.