A key barometer for the health of the economy continues to flash a recession warning sign, indicating a downturn is in store for the US in the near future. A growing number of business leaders agree that the US economy is getting worse.
America isn’t in an official recession — not yet, at least — but the Conference Board’s leading economic index fell for the 10th straight month, dropping 1% in December to 110.5, according to a report released Monday by think tank business tank. Economists had expected a 0.7% decline, according to Refinitiv.
On average, the index peaks about a year before a recession, according to the Conference Board. The index appears to have peaked in February 2022, the institute noted.
“There was widespread weakness across leading indicators in December, indicating deteriorating conditions for labor, manufacturing, housing construction and financial markets in the coming months,” Ataman Ozyildirim, senior director of economics at the Conference Board, said in a statement.
Seven of the 10 index components fell in December, and the LEI’s trajectory continues to signal a recession, according to the report.
“The overall economic activity is likely to turn negative in the coming quarters before picking up again in the last quarter of 2023,” said Ozyildirim.
The official arbiter of a recession is a panel of economists from the National Bureau of Economic Research, which takes into account a range of economic indicators before making a decision – which can sometimes occur after a recession has already begun.
But about 52% of economists polled by the National Association for Business Economics believe there is more than a 50% chance the US will slip into a recession this year, according to the latest NABE survey of business conditions released Monday morning. fair.
“For the first time since 2020, more respondents expect employment at their companies to fall rather than rise over the next three months,” said Julie Coronado, president of NABE, in the report. “Fewer respondents than in recent years expect their companies’ capital spending to increase over the same period.”
US economic activity has shown signs of slowing in recent months, with the Federal Reserve unleashing a flurry of interest rate hikes to curb inflation.
Fed officials say they are seeing progress in inflation, but that tight monetary policy – and future hikes – will continue to take place.
The next two-day meeting of the Fed’s rate-setting committee begins on Jan. 31. Expectations are that the central bank will raise rates by a quarter of a point, according to the CME FedWatch tool.
Ahead of that meeting, the Fed will have additional economic data to review: fourth-quarter GDP data and the Personal Consumption Expenditure report (which contains the Fed’s preferred inflation gauge) will be released Thursday and Friday, respectively.
Source: CNN Brasil
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