The Conference Board's US leading indicator index fell by 0.3 percent in June, resuming its downward slide following May's flat reading (previously -0.1 percent), and falling faster than the 0.2 percent drop expected in the Econoday consensus forecast. Over the six-month period between December 2024 and June 2025, the LEI plunged 2.8 percent, a bigger decline than the 1.3 percent decrease over the preceding six-month period.

The Conference Board said the stock market rally was again the main positive contributor, but not enough to counter consumer pessimism, persistently soft manufacturing new orders, and a third straight month of rising first-time jobless claims.

In addition, the LEI's six-month growth rate weakened, while the diffusion index over the past six months remained below 50, triggering the recession signal for a third consecutive month, it warned.

At this point, The Conference Board does not forecast a recession, although economic growth is expected to slow substantially in 2025 compared to 2024, the report added. Real GDP is projected to grow by 1.6 percent this year, with the impact of tariffs becoming more apparent in H2 as consumer spending slows due to higher prices.

The Conference Board US Coincident Economic Index was up 0.3 percent in June, following no change in May. Overall, the CEI is up 0.8 percent in the six-month period ending in June, slowing down from the 1 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. All components of the coincident index improved in June, the report said.

The Conference Board US Lagging Economic Index was flat in June, following a 0.4 percent increase in May. The LAG's six-month growth rate jumped 1.4 percent over the six-month period ending in June, erasing the 0.8 percent drop for the prior six months.

The consensus forecast looks for another modest decline 0f 0.2 percent in June after a 0.1 percent dip in May.

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.