July Drop in Leading Index Adds to String of Declines

Source: Economics Group of Wells Fargo Bank, N.A. Summary The Leading Economic Index declined for the fifth consecutive month in July and continues to point to a deterioration in economic activity. We don’t yet think broad economic conditions are consistent with recession. But activity is slowing, and the trend decline in the index supports our view that the economy may slip into a recession by the beginning of next year.

Broad Signs of Weakness

The Leading Economic Index (LEI) slid 0.4% in July, adding to a string of recent declines (chart). Consumer sentiment has buckled amid raging inflation and increasing concern of recession. With the University of Michigan’s measure of consumer expectations sliding to its lowest reading in data going back to 2000 in July, it’s little surprise the component sliced 0.37 percentage points off the LEI for the month (chart). READ FULL ARTICLE>>