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Economic Report: This economic indicator is also signaling a U.S. recession

The numbers: The U.S. leading economic index fell in September for the seventh time in nine months and suggested “a recession is increasingly likely before yearend.”

The Conference Board’s leading index dropped 0.3% last month, extending a bout of weakness that began in the early spring.

The index’s “persistent downward trajectory in recent months suggests a recession is increasingly likely before yearend,” said Ataman Ozyildirim, senior director of economics at The Conference Board.

Sam Bullard, senior economist at Wells Fargo, also said the index is pointing to recession.

Any time in the past 60 years that the index has shown an average -0.4% change over six months, he said, a recession has followed. The index has averaged a – 0.5% change in the most recent six-month span.

The LEI is a gauge of 10 indicators designed to show whether the economy is getting better or worse. Economists polled by The Wall Street Journal had forecast a 0.3% decline.

Big picture: The economy is headed for trouble.

High inflation and rising interest are slamming consumers and businesses consumers. And the pressure is not about to let up as the Federal Reserve tries to tame the worst inflation in 40 years. Higher interest rates slow the economy.

Read: Most economists think a recession is coming and CEOs are preparing for one

Key details: Most of the components of the leading economic index signaled weakness. For now the economy is still doing OK, though.

A measure of current economic conditions rose 0.2%. And the so-called lagging index — a look of sorts in the rearview mirror — increased 0.6%.

Looking ahead: “The pace of economic growth is slowing and signaling a recession some time in the next year,” Bullard said.

Market reaction: The Dow Jones Industrial Average
DJIA,
+1.02%

S&P 500
SPX,
+0.84%

rose sharply in Thursday trades.

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