The Conference Board's US leading indicator index fell 0.5 percent in August, resuming its downward slide following July's 0.1 percent bump (revised from a 0.1 percent decline), and bigger than the -0.1 percent consensus in the Econoday forecast. Over the six-month period between February and August 2025, the LEI plunged 2.8 percent, a much faster decline than the 0.9 percent decrease over the preceding six-month period.

The Conference Board said the August LEI signals more headwinds ahead, as the stock market rally was not enough to offset consumer pessimism, weak manufacturing new orders, and a softening labor market (a jump in jobless claims and a contraction in average weekly manufacturing hours).

Overall, the LEI suggests that economic activity will continue to slow, it warned.

A major driver of this slowdown has been higher tariffs, which already trimmed growth in H1 2025 and will continue to be a drag on GDP growth in the second half of this year and in H1 2026, the report added. The Conference Board, while not forecasting recession currently, expects GDP to grow by only 1.6 percent in 2025, a substantial slowdown from 2.8 percent in 2024.

The Conference Board US Coincident Economic Index was up 0.2 percent in August, following a 0.1 percent uptick in July (a downward revision from the 0.2 percent rise initially reported). Overall, the CEI is up 0.6 percent in the six-month period ending in August, slowing down from the 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. All components of the coincident index improved only slightly in August, with payroll employment making a neutral contribution to the CEI, the report said.

The Conference Board US Lagging Economic Index was up just 0.1 percent in August, following a flat reading in July. The LAG's six-month growth rate rose 0.7 percent over the six-month period ending in August, more than doubling the 0.3 percent rise for the prior six months.

The index is seen down 0.1 percent in August after declining by 0.1 percent in July.

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.