A “short and shallow” recession is forecast by The Conference Board for the fourth quarter of this year and the first quarter of 2024. The organization’s Leading Economic Index for the US fell for the 16th consecutive month in July, signaling the outlook remains uncertain. 

“The Conference Board now forecasts a short and shallow recession in the [fourth quarter to the first quarter] timespan,” Justyna Zabinska-La Monica, senior manager of business cycle indicators at the organization, said in a press release. “The Leading Index continues to suggest that economic activity is likely to decelerate and descend into mild contraction in the months ahead.”  

In July, the Leading Economic Index fell 0.4% to a reading of 105.8 (2016=100). July’s decline follows a contraction of 0.7% in June.  

July’s decrease in the Leading Economic Index was fueled by weak new orders, high interest rates, a dip in consumer perceptions of the outlook for business conditions and decreasing hours worked in manufacturing.  

The index is now down 4.0% over the six months between January and July 2023 — a slight deterioration from its 3.7% contraction over the previous six months from July 2022 to January 2023.  

However, Zabinska-La Monica noted The Conference Board’s Coincident Economic Index — which tracks where economic activity stands right now — has continued to grow slowly but inconsistently, with three of the past six months not changing and the rest increasing.  

“As such, the Coincident Index is signaling that we are currently still in a favorable growth environment,” she said. 

The Coincident Index rose 0.4% in July to a reading of 110.5 after no change in June.