The index of leading economic indicators has resumed its downdraft in force, falling a much steeper-than-expected 0.6 percent in April following March's 0.3 percent decline and February's lone looking 0.1 percent increase that marked an end (or at least an interruption) in two full years of decline. April's decline reflected deterioration in consumer sentiment, ISM manufacturing orders, a negative yield spread, and a drop in building permits.

The report said the decline"confirms" that softer economic conditions lay ahead and as always is waving the dark banner of pessimism:"elevated inflation, high interest rates, rising household debt, and depleted pandemic savings are all expected to continue weighing on the US economy in 2024." The Conference Board, which publishes this report, sees US GDP slowing to under 1 percent in the second and third quarters.

After only one month in the plus column, the index of leading economic indicators fell back into contraction in March at minus 0.3 percent. April's consensus is another 0.3 percent decline.

The index of leading economic indicators is a composite of 10 forward-looking components including building permits, new factory orders, and unemployment claims. The report attempts to predict general economic conditions six months out.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the index of leading indicators, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly -- and causing potential inflationary pressures. The index of leading indicators is designed to predict turning points in the economy -- such as recessions and recoveries. More specifically, it was designed to lead the index of coincident indicators, also now published by The Conference Board. Investors like to see composite indexes because they tell an easy story, although they are not always as useful as they promise. The majority of the components of the leading indicators have been reported earlier in the month so that the composite index doesn't necessarily reveal new information about the economy. Bond investors tend to be less interested in this index than equity investors. Also, the non-financial media tends to give this index more press than it deserves.