A Widely Watched Recession Alarm is Growing Louder

The Conference Board’s Leading Economic Index took its biggest monthly fall since April 2020

A rusty padlock and chain on gates of closed automobile plant

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If you want to know the direction the economy is headed, the Conference Board’s Leading Economic Index is sending a clear signal: a recession is coming, and soon. 

The index fell 1.2% in March, the Conference Board, a nonprofit economics think tank, said Thursday. That was more than the 0.7% drop economists had expected, and marked its largest single-month decline since April 2020 at the height of the pandemic’s economic turmoil. The Leading Economic Index (LEI) has been signaling a recession ahead for months, a probability that only deepened with the latest data. Conference Board economists expect a recession in mid-2023.

The index’s latest reading suggests it’s time to “brace for impact,” economists at Wells Fargo Securities said in a commentary. The LEI is one piece of data among many indicating a recession, long predicted by economists, is just around the corner. A group of economists surveyed by the Wall Street Journal this week put the odds of a recession at 61%, starting in the third quarter of the year.

To be sure, the economy has defied past predictions of an impending economic downturn, with recent data on hiring showing that the job market is holding up better than expected, and that unemployment remains near historic lows. The LEI reading for March, however, was especially dismal, without the silver linings that could be seen in previous months. Out of the 10 indicators that make up the index, only two, manufacturing orders and the stock market, barely squeaked into positive territory. 

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  1. The Conference Board. "U.S. Leading Indicators."

  2. Wells Fargo Securities. "And the Bottom Drops Out: LEI Digs Even Deeper."

  3. The Wall Street Journal. "Economists Turn More Pessimistic on Inflation."

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