The Conference Board’s Leading Economic Indicators index fell again in December. Tim Smart reports for U.S. News & World Report:
The business organization’s leading economic index fell 1% from November, when it dropped by 1.1%.
“The US LEI fell sharply again in December – continuing to signal recession for the US economy in the near term,” said Ataman Ozyildirim, senior director, economics, at the board. “There was widespread weakness among leading indicators in December, indicating deteriorating conditions for labor markets, manufacturing, housing construction, and financial markets in the months ahead.”
“Overall economic activity is likely to turn negative in the coming quarters before picking up again in the final quarter of 2023,” he added.
However, the American consumer has proven resilient amid the strain of higher borrowing costs and elevated prices for necessities. A drop in the price of gasoline from last summer’s peaks and continued improvement in the inflation data has some economists believing the Federal Reserve can pull off a “soft landing” where inflation recedes and the economy does not go into a recession.
The Fed meets next week to consider raising interest rates, with most experts calling for a quarter point increase following December’s 50-basis-point hike. That would be a slowing in the pace of increases and bring the Fed closer, in the minds of investors, to an end of its most aggressive monetary tightening in decades.
Still, key Fed officials in recent days have emphasized that a reduction in the level of rate hikes does not suggest a pause or a pivot to cutting rates should the economy worsen.
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