Third Straight Conference Board Drop Flags Recession Risk for Credit Portfolios

The Conference Board Leading Economic Index (LEI) for the U.S. declined by 0.3% in June, following a flat reading in May (revised upward from an initial −0.1%), per a Monday (July 21) news release.

The Index now stands at 98.8 marking its lowest level since the COVID-era recovery. Over the first half of 2025, the LEI has dropped by 2.8%, a much steeper decline than the −1.3% contraction recorded in the latter half of 2024.

A strong rally in equity markets continued to lend some support, but it was outweighed by persistent softness in key components: weak consumer expectations, falling new manufacturing orders and a third straight monthly increase in jobless claims. The breadth of weakness across components remains significant, as captured by a diffusion index below 50. This, combined with the deteriorating six-month growth rate, has triggered The Conference Board’s recession signal for the third consecutive month.

“At this point, The Conference Board does not forecast a recession, although economic growth is expected to slow substantially in 2025 compared to 2024,” Justyna Zabinska-La Monica, senior manager, business cycle indicators at The Conference Board, said in the release.

While a formal recession is not yet forecasted, the Conference Board anticipates a meaningful deceleration in growth. Real GDP is projected to grow by just 1.6% in 2025, with rising tariff impacts and slowing consumer demand expected to weigh further on economic momentum in the second half of the year.

The Coincident Economic Index (CEI), which reflects current economic conditions, rose by 0.3% in June to 115.1, after holding steady in April and May. All four components (employment, income, sales and industrial output) registered gains, though the overall six-month growth rate has slowed to 0.8%, from 1.0% in the previous period.

The Lagging Economic Index (LAG) held flat at 119.9 in June, following a 0.4% rise in May. Its six-month growth rate remains positive at 1.4%, signaling that backward-looking indicators have yet to fully reflect the mounting economic headwinds.

Despite continued resilience in coincident and lagging data, the steady decline in the LEI, ongoing component weakness, and persistent recession signals point to a more fragile economic path ahead.