The payment: The US benchmark index fell 0.4% in July, marking the fifth straight decline, reflecting a slowdown in the economy amid rising interest rates and consumer pessimism.
Economists polled by the Wall Street Journal had forecast a 0.5% decline.
The LEI is a scale of 10 indicators designed to show whether the economy is improving or deteriorating. The report is published by the Conference Board, a private non-profit organization.
Big picture: The US economy seemed to falter in the spring and early summer, but of late it has shown more resilience. Employment soared in July and layoffs leveled off after a sharp rise in the spring.
Consumers are still spending heavily, and businesses continue to produce many goods and services.
However, storm clouds are gathering on the horizon.
The Federal Reserve is raising interest rates sharply to try to quell the highest inflation in nearly 40 years, and higher rates tend to slow the economy.
Some economists fear that if inflation doesn’t ease and the Fed can take its foot off the brakes, there could be a recession next year.
“The US LEI declined for the fifth consecutive month in July, suggesting recession risks are increasing in the near term,” said Ataman Ozyildirim, the board’s senior director of economic research.
Key data: The leading economic index fell in July mainly due to falling stock prices, a slowdown in home construction, higher jobless claims, falling consumer confidence and lower manufacturing orders.
However, as early as August, stocks rebounded and jobless claims fell.
The July report was not all negative either. A measure of current economic conditions rose 0.3%, while the so-called lag index – a kind of looking in the rear-view mirror – rose 0.4%.
Market reaction: The Dow Jones Industrial Average DJIA, -0.21% S&P 500 SPX, +0.02% fell in trading on Thursday.
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