Leading U.S. economic index edges down in August

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Leading U.S. economic index edges down in August

By Marianne Wilson - 09/18/2020

The economic recovery may be starting to lose steam.

The leading economic index rose 1.2% in August, the Conference Board said Friday. This is a slower pace than the revised 2% increase in July and 3.1% increase in June. 

“While the U.S. LEI increased again in August, the slowing pace of improvement suggests that this summer’s economic rebound may be losing steam heading into the final stretch of 2020,” said Ataman Ozyildirim, senior director of economic research at The Conference Board. “Despite the improvement, the LEI remains in recession territory, still 4.7 percent below its February level.”

Weakening in new orders for capital goods, residential construction, consumers’ outlook, and financial conditions point to increasing downside risks to the economic recovery, according to Ozyildirim.

“Looking ahead to 2021, the LEI suggests that the US economy will start the new year under substantially weakened economic conditions,” he said.

The 10 components of The Conference Board’s Leading Economic Index for the U.S. include:

Average weekly hours, manufacturing;
Average weekly initial claims for unemployment insurance;
Manufacturers’ new orders, consumer goods and materials;
ISM Index of New Orders;
Manufacturers’ new orders, nondefense capital goods.  excluding aircraft orders;
Building permits, new private housing units;
Stock prices, 500 common stocks;
Leading Credit Index;
Interest rate spread, 10-year Treasury bonds less federal funds; and
Average consumer expectations for business conditions.

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