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The Conference Board, a think-tank that measures economic activity and the views of chief executive officers, reports today that its leading U.S. economic index dropped again, suggesting the country’s overall economy is weak.
“The U.S. LEI (Leading Economic Index) fell again in May, fueled by tumbling stock prices, a slowdown in housing construction, and gloomier than expected consumer expectations,” said Ataman Ozyildirim, the organization’s senior director of economic research. “The index is still near a historic high, but the U.S. LEI suggests weaker economic activity is likely in the near term — and tighter monetary policy is poised to dampen economic growth further.”
The Leading Economic Index shows a drop of 0.04% in May 2022. This comes on the heels of a previous 0.04% drop in April, with The Conference Board saying the index has been down since November 2021.
In March, The Conference Board reported a slight increase in its U.S. Leading Economic Index, saying it was up by 0.03%.
But as Ozyildirium noted then, those “results do not reflect the full impact of the Russian invasion of Ukraine, which could lower the trajectory for the U.S. LEI and signal slower-than-anticipated economic growth in the first half of the year.”
Earlier this week, the Federal Reserve's Federal Open Market Committee (FOMC), in its attempt to lower inflation in the United States, tightened monetary policy by deciding to increase the federal funds rate, the interest rate banks use to lend to one another overnight, by 75 basis points, resulting in speculation that the country will experience a recession later this year.
Federal Reserve Chairman Jerome Powell today, during remarks at the International Roles of the U.S. Dollar conference, said that he and his colleagues on the FOMC are “acutely focused on returning inflation to our 2% objective.”
As measured by the U.S. Bureau of Labor Statistics, the Consumer Price Index, often considered the country’s inflation rate, is at 8.6%, the highest it’s been in 40 years.