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Economic Report: This major economic indicator keeps forecasting recession

The numbers: The U.S. leading economic index sank 1% in December and flashed even stronger signals that a recession is likely soon.

Economists polled by The Wall Street Journal had forecast a 0.7% decline.

The LEI is a gauge of 10 indicators designed to show whether the economy is getting better or worse. The report is published by the nonprofit Conference Board.

The index also tumbled 1.1% in November.

Big picture: The economy has slowed in response to higher interest rates orchestrated by the Federal Reserve to tame inflation. Yet the rising cost of borrowing also threatens to plunge the U.S. into a second recession four years.

Read: A recession is coming, economists say. Some even think it’s already here

Also: A ‘zero’ economy? No growth and rising unemployment forecast for 2023

Key details: The leading index fell in December due to a softening labor market, a slowdown in manufacturing and fewer homes being built. Wall Street also gave off negative signals last month.

A measure of current economic conditions rose a scant 0.1% in December.

The so-called lagging index — a look in the rearview mirror — increased by 0.3%.

Looking ahead: “The U.S. LEI fell sharply again in December — continuing to signal recession for the U.S. economy in the near term,” said Ataman Ozyildirim, senior director of economic research at the board.

Market reaction: The Dow Jones Industrial Average

and S&P 500

rose in Monday trades.

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