The Conference Board's US leading indicator index fell by 0.3 percent in January, erasing the slight momentum from December's revised 0.1 percent uptick, and compared to expectations for no change in the Econoday consensus forecast. Over the six-month period between July 2024 and January, the LEI dropped 0.9 percent, a smaller decline than the 1.7 percent decrease over the six-month period between January and July 2024.

The Conference Board said more pessimistic consumer sentiment, as well as less weekly hours worked in manufacturing, drove the LEI's decrease. Still, just four of the indicator's components were negative last month.

We currently forecast that real GDP for the U.S. will expand by 2.3 percent in 2025, with stronger growth in the first half of the year, it predicted.

In addition, the LEI's six-month and annual growth rates continued to trend upward, signaling milder obstacles to US economic activity ahead, the report added.

The Conference Board US Coincident Economic Index was up 0.3 percent in January, following a 0.3 percent increase in December. Overall, the CEI is up 1.0 percent in the six-month period ending in January, slightly higher than its 0.9 percent growth rate over the previous six-month period. The CEI's componentspayroll employment, personal income less transfer payments, manufacturing and trade sales, and industrial productionare included in the data used to determine recessions in the United States. They all improved in January, with the largest positive contribution coming from industrial production for the second consecutive month, the report said.

The Conference Board US Lagging Economic Index rose 0.5 percent in January, following no change in December. The LAG's six-month growth rate increased by 0.3 percent over the six-month period ending in January, the first positive reading since the summer of 2024.

Not an inspiring report as forecasters see the leading index flat in January after a 0.1 percent decline in December.

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.