Leading Index Says Proceed With Caution

Source: Economics Group of Wells Fargo Bank, N.A. Summary While macro-level data on hiring and consumer spending continue to suggest the economy remains resilient, the Leading Economic Index is telling us to proceed with caution. The LEI has now declined for 18 straight months and is consistent with an economy that is already in recession. Mixed Signals Economic data are giving mixed signals. Macro data on the labor market and consumer spending continue to show a resilient U.S. economy, which has led many forecasters and analysts to revise growth forecasts higher and even remove recession projections from their 2024 outlooks. Yet, the warning signs remain clear from the Leading Economic Index (LEI), which continues to suggest weakness ahead. The LEI slipped 0.7% in September and previous months’ data were also revised lower. The index has now declined for 18 straight months, and all of the usual cuts of this data are consistent with an economy that is already in recession (chart). We still view a modest contraction as more likely than not next year and acknowledge that even if we avoid a technical recession, growth prospects appear dim under the weight of tighter financial conditions and some initial signs of economic moderation. Our overarching takeaway from the LEI is to proceed with caution. READ FULL ARTICLE >>