Growth, Inflation & Policy
As of July 28, 2023
Leading Economic Indicators
- The Conference Board’s Leading Economic Indicators (LEI) is used to forecast future economic activity. Since 1988, the U.S. LEI has dropped below zero over a six-month period on ten occasions. On five of those occasions, the LEI has dropped below -4%, signaling a recession every time.
- In May 2021, the LEI’s six-month change dropped below zero, triggering a recession warning. In June 2022, the Index dropped below -4%. The most recent reading (June 2023) showed a further decline of 0.7%, which kept the six-month change below -4% (at -4.3%). The LEI continues to signal a looming recession.
Inflation
- June marked the one-year anniversary of inflation in the U.S. reaching a four-decade high of 9.1%. Since then, headline inflation has trended lower to 3.0%, while core inflation has stayed stubbornly high, with a reading of 4.8% in June.
- However, despite the welcome easing of prices, inflation could tick up again towards the end of the year due to base effects, as the highest monthly readings start to fall out of the 12-month reference period.
- Until now, it has been relatively ‘easy’ for monthly inflation readings to be lower than last year’s near-record high levels (June 2022’s month-over-month increase of 1.2% was one of the highest on record).
- It now becomes increasingly challenging for month-over-month inflation prints to be lower than the monthly increases a year ago, making it trickier for year-over-year inflation to cool further.
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