U.S. Activity Still Listless, Points to Recession This Year
January 22 2024 - 10:49AM
Dow Jones News
By Joshua Kirby
Economic activity looks set to weaken further in the U.S. but at
a lower pace than earlier, as weak manufacturing and consumer
sectors continue to suggest recession in 2024.
The Conference Board said Monday that its Leading Economic Index
fell 0.1% in December, having fallen 0.5% in November, marking 21
months of unceasing decline.
The index had been expected to fall a little more sharply, down
0.3%, according to a poll of economists compiled by The Wall Street
Journal.
The index's continued slide points to underlying weakness in the
economy, said Justyna Zabinska-La Monica, senior manager for
Business Cycle Indicators at The Conference Board. Six of 10
components turned positive, suggesting some green shoots at the end
of the year. But weakness in manufacturing and consumer spending
amid high interest rates dragged the overall indicator
downward.
The index contracted by 2.9% in the year's second half, slowing
from 4.3% in the previous six months.
"As the magnitude of monthly declines has lessened, the LEI's
six-month and 12-month growth rates have turned upward but remain
negative, continuing to signal the risk of recession ahead,"
Zabinska-La Monica said. "Overall, we expect gross domestic product
growth to turn negative in the second and third quarter of 2024 but
begin to recover late in the year," she said.
Despite the dip in the index, the odds of a recession are
decreasing in the U.S., according to a WSJ poll of economists
published earlier this month. They now see the likelihood at 39%,
down sharply from the previous survey, though they warn that growth
will be sluggish in any case.
The Leading Economic Index is a predictive variable that
anticipates turning points in the business cycle by around seven
months. The indicator is based on 10 components, among them initial
claims for unemployment insurance, manufacturers' new orders,
building permits of new private housing units, stock prices and
consumer expectations. It is intended to signal swings in the
business cycle.
Write to Joshua Kirby at joshua.kirby@wsj.com;
@joshualeokirby
(END) Dow Jones Newswires
January 22, 2024 10:34 ET (15:34 GMT)
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