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Leading Economic Index No Longer Signals Recession, But Growth Stalls

For the first time in two years, the Leading Economic Index has stopped indicating an imminent recession, although experts predict near-zero GDP growth in the upcoming quarters.

Overview

  • The Leading Economic Index, a reliable recession predictor, has ceased signaling a recession for the first time since 2022, marking a potential shift in economic forecasts.
  • Despite the positive shift, the index has fallen for 23 consecutive months, reaching its lowest level since April 2020, reflecting ongoing economic challenges.
  • Six out of ten components of the index showed positive trends, contributing to the revised outlook that no longer anticipates a recession.
  • High-profile investors and economists had previously warned of a recession based on the index's prolonged decline, highlighting the significance of its recent change in trajectory.
  • While the recession warning has been lifted, real GDP growth is expected to stall to near zero in the second and third quarters of 2024, indicating a slow economic recovery.