The Conference Board Leading Economic Index (LEI) reported a 0.3% decrease in February 2025, building on a revised decline of 0.2% in January. This continued downturn indicates persistent challenges within the U.S. economy as the index maintains its long-standing downward trend.

On a broader scale, the LEI’s performance over the six months leading up to February demonstrates a 1% decline, a notable improvement compared to the 2.1% drop recorded during the previous six-month period.

Analysis of Current Economic Indicators

Justyna Zabinska-La Monica, senior manager at The Conference Board, commented on the latest data, stating, “The U.S. LEI fell again in February and continues to point to headwinds ahead.” She identified deteriorating consumer expectations regarding future business conditions as the principal factor impacting the Index in February.

Additionally, a rebound in manufacturing new orders observed in January reversed course in February, contributing significantly to the month’s decline.

Despite these negative trends, Zabinska-La Monica highlighted a positive shift, noting that the LEI’s six-month and annual growth rates, while still negative, have been improving since late 2023. This suggests a potential moderation in the economic headwinds compared to the previous year.

The forecast anticipates real GDP growth for the U.S. to slow to around 2% in 2025, reflecting significant policy uncertainty and a notable decline in consumer sentiment and spending early in the year.

Consumer Confidence and Housing Market Trends

The decline in the LEI aligns with recent trends in pending home sales, indicating that consumers are hesitant to make substantial purchases amid current economic conditions. This hesitance coincides with the Federal Reserve’s decision to maintain interest rates, further contributing to the uncertainty surrounding economic projections.

The Coincident Economic Index (CEI)

In contrast to the LEI, the Conference Board’s Coincident Economic Index (CEI) increased by 0.3% in February 2025, reaching a reading of 114.7. This follows a 0.2% rise in January and signals a 1.2% increase in the six months preceding February, significantly up from the previous 0.6% growth rate.

The CEI’s growth is supported by improvements in key indicators, including payroll employment, personal income excluding transfer payments, manufacturing and trade sales, and industrial production, with industrial production showing the strongest gains in February.

Components of the Leading Economic Index

The LEI is derived from ten key components that are important metrics for evaluating the U.S. economy, including:

• Average weekly hours in manufacturing
• Average weekly initial claims for unemployment insurance
• Manufacturers’ new orders for consumer goods and materials
• ISM® Index of New Orders
• Manufacturers’ new orders for nondefense capital goods excluding aircraft orders
• Building permits for new private housing units
• S&P 500® Index of Stock Prices
• Leading Credit Index™
• Interest rate spread (10-year Treasury bonds less federal funds rate)
• Average consumer expectations for business conditions