Economic barometer warns that US recession could be imminent


Minneapolis
CNN

An important barometer of the health of the economy continues to send a recession warning signal, indicating that the US is facing a recession in the near future. A growing number of business leaders agree that the US economy is deteriorating.

America is not yet in an official recession, at least not yet, but the Conference Board’s Leading Economic Index fell for a 10th straight month, falling 1% in December to 110.5, according to a report released by the US on Monday. business think tank has been released. Economists, according to Refinitiv, expected a decline of 0.7%.

According to the Conference Board, the index peaks on average about a year before a recession. The index appears to have peaked in February 2022, the Conference Board noted.

“In December, there was widespread weakness in leading indicators, pointing to deteriorating conditions for labor, manufacturing, housing and financial markets in the coming months,” said Ataman Ozyildirim, senior director of economics at the Conference Board.

Seven of the index’s 10 components fell in December, and the LEI’s trajectory continues to point to a recession, according to the report.

“Overall economic activity is likely to turn negative in the coming quarters and pick up again in the last quarter of 2023,” Ozyildirim said.

The official arbiter of a recession is a panel of economists from the National Bureau of Economic Research, who consider a range of economic indicators before making a decision – which can sometimes happen after a recession has already started.

But about 52% of economists surveyed by the National Association for Business Economics believe there’s a greater than 50-50 chance that the U.S. will slip into recession this year, according to the NABE’s latest business conditions survey released Monday morning. released.

“For the first time since 2020, more respondents expect the number of jobs at their company to decrease rather than increase over the next three months,” Julie Coronado, NABE’s president, said in the report. “Fewer respondents than in recent years expect their company’s capital expenditures to increase over the same period.”

US economic activity has shown signs of slowing in recent months as the Federal Reserve unleashed a barrage of rate hikes to curb inflation.

Fed officials say they see progress on inflation, but restrictive monetary policy — and future hikes — will continue.

The next two-day meeting of the Fed’s interest rate committee begins on January 31. The central bank is expected to raise interest rates by a quarter, according to the CME FedWatch tool.

Before that meeting, the Fed will have additional economic data to review: Fourth-quarter GDP data and the Personal Consumption Expenditure report (which includes the Fed’s favorite inflation gauge) will be released on Thursday and Friday, respectively.

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