A gauge of future economic activity fell again in May following a downward revision for April as consumer pessimism continued to grow amid worries about the labor market, inflation and the imposition of import tariffs.
While May’s drop of 0.1% in the Conference Board’s leading economic index was an improvement on April’s 1.4% decline, it leaves the six-month trend close to recessionary levels. The index has fallen by 2.7% in the six months leading up to May, a sharper downturn than the 1.4% dip in the prior six months.
“The LEI for the U.S. fell again in May, but only marginally,” said Justyna Zabinska-La Monica, senior manager of business cycle indicators, at The Conference Board. “The recovery of stock prices after the April drop was the main positive contributor to the Index. However, consumers’ pessimism, persistently weak new orders in manufacturing, a second consecutive month of rising initial claims for unemployment insurance, and a decline in housing permits weighed on the Index, leading to May’s overall decline.”
“With the substantial negatively revised drop in April and the further downtick in May, the six-month growth rate of the Index has become more negative, triggering the recession signal,” Zabinska-La Monica said in a written analysis. “The Conference Board does not anticipate recession, but we do expect a significant slowdown in economic growth in 2025 compared to 2024, with real GDP growing at 1.6% this year and persistent tariff effects potentially leading to further deceleration in 2026.”
