A monthly index forecasting economic conditions in the United States has dropped nearly 7 percent, the largest monthly decline in the 60-year history of the index.
The Conference Board Leading Economic Index (LEI) fell 6.7 percent in March to 104.2. A separate measure of current conditions also fell, while a measure of past performance increased.
“The sharp drop in the LEI reflects the sudden halting of business activity as a result of the global pandemic and suggests the U.S. economy will be facing a very deep contraction,” said Ataman Ozyildirim, senior director of economic research at the Conference Board.
“The unprecedented and sudden deterioration was broad-based, with the largest negative contributions coming from initial claims for unemployment insurance and stock prices,” Ozyildirim said.
The Leading Economic Index has retreated 6.6 percent over the past six months after edging up a tenth of a percent in the six months before that. Weaknesses among the leading indicators have become more widespread.
Gross domestic product, the broad measure of goods and services produced in the country, increased at an annual rate of 2.1 percent in the third and fourth quarters of 2019.
For March, six of 10 indicators of the index retreated, including average weekly manufacturing hours, building permits, consumer expectations, a new orders index and stock prices. A surge in average weekly initial claims for unemployment insurance also pulled down the index. Three indicators advanced: the interest rate spread and new orders for capital and consumer goods. A leading credit index held steady.
The Coincident Economic Index, a measure of current conditions, decreased nine-tenths of a percent to 106.6. The index has slipped three-tenths of a percent over the past six months.
For March, income and sales increased while industrial production and payrolls decreased.
The Lagging Economic Index, a measure of past performance, rose 1.2 percent to 110.2. The index has increased 1.4 percent over the past three months.
For March, commercial and industrial financing and the cost of labor increased. A decrease in the average duration of unemployment also bolstered the index. The average prime rate charged by banks, the cost of services and inventories declined. Consumer debt held steady.