US on Brink of Recession as Leading Indicators Plummet Downward

The U.S. business cycle index extended its decline for the 15th consecutive month in June, indicating a weakening consumer outlook and rising unemployment claims. This marks the longest continuous decrease since the 2007-2009 recession.

The Leading Economic Index, designed to anticipate future economic activity, dropped by 0.7% in June to 106.1, following a revised 0.6% decline in May. Economists had expected a slightly lower decrease of 0.6%, according to a survey poll.

Justyna Zabinska-La Monica, senior manager of business cycle indicators at The Conference Board, expressed concerns about the economic activity, predicting a continued deceleration in the coming months. The Conference Board reiterates its forecast of a potential U.S. recession from the third quarter of the current year until the first quarter of 2024.

Factors like elevated prices, tighter monetary policies, restricted credit availability, and reduced government spending are expected to further dampen economic growth, according to Zabinska-La Monica.

The contraction in the Leading Economic Index is accelerating, with a 4.2% decline over the last six months compared to 3.8% between June and December 2022.