The Conference Board's US leading indicator index fell by 0.1 percent in July, continuing its downward slide following June's unrevised 0.3 percent decline, in line with the Econoday consensus forecast. Over the six-month period between January and July 2025, the LEI plunged 2.7 percent, a bigger decline than the 1.0 percent decrease over the preceding six-month period.

The Conference Board said the stock market rally was again the main positive contributor along with an improvement in initial jobless claims, but not enough to counter consumer pessimism and weak manufacturing new orders.

While the LEI's six-month growth rate remains negative, it improved slightly in Julybut not enough to avoid triggering the recession signal again, it warned.

Despite that, The Conference Board does not currently project a recession, though we do expect the economy to weaken in H2 2025, as the negative impacts from tariffs become more visible, the report added. Overall, real GDP is projected to grow by 1.6% year-over-year in 2025, before slowing in 2026 to 1.3%.

The Conference Board US Coincident Economic Index was up 0.2 percent in July, following a flat reading in June (a downward revision from the 0.3 percent rise initially reported). Overall, the CEI is up 0.9 percent in the six-month period ending in July, speeding up from the 0.6 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 except industrial production improved in July, the report said.

The Conference Board US Lagging Economic Index was unchanged in July, the same as in June. The LAG's six-month growth rate rose 0.9 percent over the six-month period ending in July, erasing the 0.1 percent drop for the prior six months.

More erosion in the economic outlook expected with the leading index down 0.1 percent, reflecting weak consumer confidence, rising jobless claims and falling manufacturing new orders.

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.