Despite a recent shift in sentiment suggesting the U.S. economy might dodge a recession, key forecasting tools are telling a different story.
Fresh data reveals that the Leading Economic Index (LEI)—a composite of predictive indicators closely watched by economists—declined once again in May. This latest drop marks the sixth straight monthly decrease, continuing a pattern that has unfolded across 37 of the past 39 months. Such a prolonged slump hasn’t been seen in decades.
What’s more concerning is the LEI’s annualized six-month trajectory, which now shows a 5% contraction. Historically, similar movements have preceded every American recession since the 1960s. At present, the index is sitting at its lowest point in nine years, down roughly 16% from its peak.
The LEI aggregates a broad range of forward-looking metrics—everything from jobless claims to consumer sentiment and manufacturing activity—making it a powerful predictor of shifts in economic momentum. A steady decline typically signals a cooling economy before the downturn becomes apparent in broader data.
Even so, broader confidence in the economy has improved. Markets initially braced for a downturn earlier this year after trade tensions under President Trump’s administration pushed sentiment toward pessimism. But recent agreements with major trading partners have tempered those concerns. Investment banks like JPMorgan have cut their recession forecasts, and prediction platforms such as Polymarket now reflect just a 28% chance of a U.S. recession in 2025, down significantly from earlier predictions.
Still, not everyone is convinced by the optimistic tone. Economist Steve Hanke continues to warn of an approaching recession, pegging the odds at 90%. He cites the residual impact of trade policies and a shrinking money supply as silent drivers of a potential second-half contraction next year—regardless of the market’s current optimism.
U.S. inflation accelerated in June, dealing a potential setback to expectations of imminent Federal Reserve rate cuts.
In a surprising long-term performance shift, gold has officially outpaced the U.S. stock market over the past 25 years—dividends included.
The United States has rolled out a broad set of new import tariffs this week, targeting over 30 countries and economic blocs in a sharp escalation of its trade protection measures, according to list from WatcherGuru.
After a week of record-setting gains in U.S. markets, investors are shifting focus to a quieter yet crucial stretch of macroeconomic developments.