The Conference Board’s Leading Economic Index (LEI) is currently signposting a looming “economic slowdown,” raising concerns over the future economic landscape.

Declining LEI and Economic Slowdown

The LEI, a forward-looking measure of the economic climate, experienced a significant fall in April, dropping by 1% following a similar decline in March. Such a significant one-month decrease has not been witnessed in over two years.

The Conference Board’s Predictions

While The Conference Board is not forecasting an imminent recession, it does anticipate a significant deceleration in economic growth this year to 1.6%, marking a substantial decrease from 2.8% in 2024.

Factors Contributing to the LEI Decline

The LEI is a composite of 10 distinct components encompassing finance, labor, manufacturing, and construction, most of which were in decline in April. This includes a noteworthy drop in building permits, according to Justyna Zabinska-LaMonica, a senior manager of business cycle indicators at the Conference Board.

“Building permits took a huge hit in April,” she noted. “Builders are reluctant to commence any new construction projects in light of the current uncertainty.”

Uncertainty, Tariffs, and Inflation

Much of this uncertainty can be attributed to tariffs and the potential resultant inflation. The most significant dips in the April LEI were registered in stock prices and consumer expectations.

Consumer Sentiment and Future Instability

“A growing number of consumers are reporting weakening incomes,” commented Joanne Hsu, the director of the University of Michigan consumer surveys. “With two-thirds of consumers expecting unemployment rates to rise, the robust incomes that bolstered consumer spending post-pandemic are not predicted to last.”

Overall, consumers are expressing concerns over potential future instability in their personal finances, Hsu added.