Analysis: The leading economic indicators in the United States continue to decline, but no longer indicate an economic recession

According to CoinDesk, data released on Tuesday by The Conference Board, a non partisan non-profit research institution, shows that major economic indicators in the United States still point to an economic slowdown, but no longer indicate a recession. This is a positive signal for risk assets, including cryptocurrencies. After a 0.2% decline in June, the organization's leading economic indicator (LEI) fell by 0.6% to 100.4 in July. According to data source MacroMicro, this indicator reached its peak in the second quarter of 2022 and has been declining ever since. LEI includes several forward-looking indicators, such as the average weekly working hours in the manufacturing industry, the average weekly first-time unemployment insurance applications, the ISM new orders index, stock prices, and the leading credit index. It helps identify changes in economic trends and turning points in financial markets, and is considered one of the most reliable signals of an economic recession (defined as a continuous quarterly contraction in growth rate). The continuous decline of the leading index indicates that the economy is about to encounter headwinds. However, the annualized six-month change rate of the leading index in July narrowed from -3.1% in June to -2.1%, indicating that the risk of economic recession is diminishing. Justyna Zabinska La Monica, Senior Manager of Business Cycle Indicators at the committee, stated in a statement that "the leading index continues to decline month on month, but the six-month annual growth rate no longer indicates a recession in the future." The latest data may give risk asset bulls peace of mind. Considering the recent market downturn and the resulting low sentiment, painful trading in stocks and cryptocurrencies may now be at a relatively high level. At the beginning of this month, non farm payroll data in the United States showed a significant slowdown in employment growth in July, and the market began to worry about an economic recession. The yield curve of US treasury bond bonds shows a steep bull market, indicating economic recession, and the so-called Sam rule also issued a similar warning. The large-scale liquidation of yen arbitrage trading has added fuel to the fire. The chart shows that although The Conference Board's leading index is showing a downward trend, synchronous indicators indicating the current state of the economy are rising along with lagging indicators. This is a typical sign of the economy entering the later stage of expansion.