The Conference Board's US leading indicator index dipped 0.1 percent in December, losing some momentum following November's upwardly revised 0.4 percent increase, and in line with expectations in the Econoday consensus forecast. Over the six-month period between June and December 2024, the LEI dropped 1.3 percent, a smaller decline than the 1.7 percent decrease over the six-month period between December 2023 and June 2024.

The Conference Board said low consumer confidence about future business conditions, still relatively weak manufacturing activity, an increase in first-time claims for unemployment, and a decline in building permits led to the LEI's decrease.

"Nonetheless, we expect growth momentum to remain strong to start the year and U.S. real GDP to expand by 2.3% in 2025," it predicted, an improvement on its prior 2025 economic growth forecast of 2 percent.

The Conference Board US Coincident Economic Index was up 0.4 percent in December, following a 0.2 percent uptick in November. Overall, the CEI is up 0.9 percent in the six-month period ending in December, higher than its 0.7 percent growth rate over the previous six-month period. The CEI's components-payroll employment, personal income less transfer payments, manufacturing and trade sales, and industrial production-are included in the data used to determine recessions in the United States."They all improved in December, with the largest positive contribution coming from industrial production, which contributed negatively in three out of the past six months," the report said.

The Conference Board US Lagging Economic Index rose 0.1 percent in December, following a 0.2 percent increase in November. The LAG's six-month growth rate contracted by 0.5 percent over the six-month period ending in December, just a slight improvement on the 0.8 percent decline for the six-month period from December 2023 to June 2024.

The leading index is expected to resume its downtrend with a decline of 0.1 percent in December after rising in November for the first time since February 2022.

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.