REAL ECONOMY BLOG | July 22, 2025
The Conference Board’s Leading Economic Index implies that the broader manufacturing sector will slow into the second half of the year.
The index, a composite index made up of 10 economic indicators, tends to lead domestic industrial production by about six months and has looked soft since April.
Trade policy, tariffs and a weaker dollar, all of which are contributing to an increase in the cost of doing business, will weigh on both profit margins and inflation
A closer look at the index shows that the only thing holding it up are elevated valuations inside the equity market.
While we do not expect the domestic economy to roll over into inflation—we see a 40% probability of a recession over the next 12 months—a growth scare could come in October or November as tariffs and a weaker dollar begin to weigh heavily on manufacturing firms.
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