The Conference Board Leading Economic Index for the US declined by 0.7% in May to a reading of 106.7 (2016=100). The decrease in May follows a decline of 0.6% in April.

“The US [Leading Economic Index] continued to fall in May as a result of deterioration in the gauges of consumer expectations for business conditions, ISM New Orders Index, a negative yield spread and worsening credit conditions,” said Justyna Zabinska-La Monica, senior manager of business cycle indicators at The Conference Board. “The US Leading Index has declined in each of the last 14 months and continues to point to weaker economic activity ahead.”

The Leading Economic Index is now down 4.3% over the six months between November 2022 and May 2023 — a steeper rate of decline than its 3.8% contraction over the previous six months from May 2022 to November 2022.

Zabinska-La Monica noted rising interest rates and persistent inflation would continue to dampen economic activity further.

The Conference Board also said the US economy would likely contract between the third quarter of this year and the first quarter of 2024. “The recession likely will be due to continued tightness in monetary policy and lower government spending,” Zabinska-La Monica said.