By Ed Frankl
U.S. economic growth is set to cool in the middle half of 2024, with consumers growing more pessimistic amid elevated interest rates and still-high inflation, a monthly indicator said.
The Conference Board said Friday that its Leading Economic Index, or LEI, declined 0.5% to 101.2 in May, a third-straight fall, after a 0.6% slump in April. That was a little sharper than the 0.3% fall expected by a consensus of economists polled by The Wall Street Journal.
"The U.S. LEI fell again in May, driven primarily by a decline in new orders, weak consumer sentiment about future business conditions, and lower building permits," said Justyna Zabinska-La Monica, senior manager for Business Cycle Indicators at The Conference Board.
While the index didn't signal recession, it implies that economic growth would slow to under 1% annualized over the second and third quarters of this year, as elevated inflation and high interest rates weigh on consumer spending, she added.
The U.S. posted 1.3% annualized gross domestic product growth in the first quarter.
The LEI 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 manufacturers' new orders, initial claims for unemployment insurance, building permits of new private housing units, stock prices and consumer expectations. It is intended to signal swings in the business cycle.
Write to Ed Frankl at edward.frankl@wsj.com
(END) Dow Jones Newswires
06-21-24 1033ET
