U.S. economic prospects dimmed further in May as key indicators of future activity slipped for the sixth consecutive month, signaling a potential recession.
Consumer pessimism, a slowdown in new orders for manufactured goods, rising jobless claims, and a decline in building permits all contributed to the downturn.
The Conference Board’s Leading Economic Index (LEI) dropped by 0.1% to 99.0 last month, following a sharp 1.4% fall in April, marking its largest drop since the early days of the COVID-19 pandemic. Economists had expected a similar result, in line with prior forecasts.
A rebound in stock prices, boosted by temporary rollbacks in President Donald Trump’s tariff policies, offered a glimmer of hope, but it wasn’t enough to offset the broader downturn.
Justyna Zabinska-La Monica, senior manager for business cycle indicators at the Conference Board, explained that the rebound in stocks was “slightly outweighed” by the other negative factors.
With the six-month growth rate now firmly negative, the index has officially triggered a recession signal.
While the Conference Board doesn’t predict an immediate recession, it forecasts a slowdown in 2025, with GDP growth expected to decelerate to 1.6%.
The lingering impact of tariffs could further dampen economic momentum, potentially leading to an even slower 2026.
The Leading Index had previously signaled a recession during the peak of the inflation wave following the pandemic, but the economy never slid into contraction.
Now, all eyes will be on how these indicators evolve in the months ahead.
Business growth could face more turbulence ahead as economic signals become more mixed. As the slowdown continues, the future of key industries will be tested by shifting economic conditions.
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