Indications that the United States will soon enter a recessionary period are strengthening as a prominent economic indicator dropped further into negative territory in September.
The Conference Board’s Leading Economic Index (LEI) declined by 0.4 percent to 115.9 in September after remaining unchanged in August, according to an Oct. 20 press release. During the six-month period between March and September, the LEI had fallen by 2.8 percent, which is a reversal from the 1.4 percent growth registered in the previous six months.
“The US LEI fell again in September and its persistent downward trajectory in recent months suggests a recession is increasingly likely before year end,” said Ataman Ozyildirim, senior director of the business think tank, in the release.
“The six-month growth rate of the LEI fell deeper into negative territory in September, and weaknesses among the leading indicators were widespread.”
The Conference Board is forecasting real GDP growth for 2022 to be 1.5 percent year-over-year amid high inflation, rising interest rates, tighter credit conditions, and slowing labor markets. The economy is expected to slow further in the first half of 2023.
The latest update comes as major investment banks are also predicting a recession in the United States. Goldman Sachs CEO David Solomon is expecting the country to be in a recession next year, but admitted that a scenario for a soft landing also exists, according to Reuters.
Fitch Ratings predicts a recession beginning Q2 of 2023. BNP Paribas is also expecting the same and estimates the Fed to raise interest rates to 5.25 percent by the first quarter next year.
CEO Expectations, Unspent Stimulus
A recent Conference Board survey showed that almost all CEOs are negative about the economic prospects of the United States in the near future.
When asked to describe the expected economic conditions in the coming 12 to 18 months, 98 percent of CEOs said they were preparing for a recession. CEO confidence was found to be at the lowest level since the Great Recession.
According to the CEOs, the three major challenges faced by the global economy are the Russia–Ukraine conflict, energy security and energy access, and political and governmental instability.
New Hampshire’s Republican Gov. Chris Sununu believes a severe recession is coming as the spending allocated in the infrastructure and American Rescue Plan Act (ARPA) packages are yet to be spent.
In an interview with CNN, Sununu pointed out that only a “fraction” of the allocated money has been spent. ARPA funds are designed to be spent in the three years between 2024 and 2026, he pointed out.
“And so, inflation is going to be very exacerbated for the next few years and the recession is going to be very real.” The country “hasn’t even begun” to feel the beginning of the recession, Sununu said.
From The Epoch Times
