The LEI falls a steeper than expected 1.0 percent in April from March after a revised 0.8 percent fall in March. The Econoday consensus looked for a 0.8 percent decline.

The bigger than expected drop reflects particularly large falls in consumer sentiment (as reported by the University of Michigan) reflecting the impact of uncertainty around President Trump's tariffs. Other big negative components in the index include falling building permits and declining hours worked in manufacturing.

The Conference Board, which compiles the report, said the significant declines do not trigger a recession signal as it still sees 2025 growth at 1.6 percent, down from 2.8 percent in 2024. Much of the impact of tariff increases is likely to hit in the third quarter, the board said.

In terms of the trend, the LEI is down 2.0 percent in the last six months, unchanged from a decline of 2.0 percent in the prior six months.

The consensus looks for another nasty decline of 0.8 percent in April after March’s 0.7 percent drop with consumer sentiment and stock prices taking a hit in April.

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.