The sharp decline in America's leading economic index in April has not yet reached the recession threshold

The Zhitong Finance App learned that according to the latest data released by the US Economic Council in May, the US Leading Economic Index (LEI) fell sharply by 1.0% to 99.4 points in April 2025, the biggest monthly decline since March 2023. The previous March data was also revised downward from -0.7% to -0.8%.

According to the data, in the six months up to April 2025, LEI had a cumulative decline of 2.0%, the same as the previous period (April to October 2024), indicating that the downward trend continues.

Justyna Zabinska-La Monica, senior manager of business cycle indicators at the American Economic Council, stated: “The current monthly decline in LEI was the most drastic since March 2023. At that time, the market was generally worried that the economy would fall into recession, even though it did not come true in the end. Most of the indicator components have deteriorated, particularly consumer business expectations, which have been weakening for several consecutive months since January 2025. At the same time, the number of construction permits and the average working hours of manufacturing workers also had a negative impact on the index for the first time in April.”

She added that the LEI component indicators have also shown a broad weakening trend over the past six months, which is a warning for economic growth. However, although the six-month cumulative decline widened further, it still did not fall to the critical level that triggered a signal of economic recession.

According to the Council's latest forecast, the real GDP growth rate of the US will slow to 1.6% in 2025, down from 2.8% in 2024. Among them, the impact of tariffs is expected to have a major impact on the economy in the third quarter.

Meanwhile, the Simultaneous Economic Index (CEI), which reflects the current state of the economy, rose slightly by 0.1% to 114.8 points in April, and continued to rise moderately after rising 0.3% in March. The index had a cumulative increase of 1.1% from October 2024 to April 2025, slightly higher than 0.9% in the previous six months.

The four major components of CEI include non-farm payrolls, personal income excluding transfers, manufacturing and trade sales, and industrial production. Among them, industrial production remained basically flat in April, which was the weakest driving component of the index.

Furthermore, the Lagging Economic Index (LAG) increased 0.3% in April to 119.3 points, reversing the 0.1% decline in March. Over the past six months (October 2024 to April 2025), LAG has accumulated a cumulative increase of 0.8%, which also reversed the 0.8% decline in the previous phase (April to October 2024), reflecting signs of recovery in post-cyclical factors in the economy.

The three comprehensive indices (LEI, CEI, LAG) compiled by the American Economic Council are widely used to determine inflection points in the economic cycle. Among them, the Leading Economic Index (LEI) consists of ten forward-looking indicators, which can predict economic transformation trends about seven months in advance; the Simultaneous Economic Index (CEI) reflects the actual operation of the current economy and is usually highly correlated with actual GDP; and the Lagging Economic Index (LAG) reflects lagging changes in economic trends and is used to assist in judging the maturity of the economic cycle.