US Economy Headed for a ‘Short’ Recession, New Data Suggest

NEW YORK (November 21) The U.S. economy is poised to enter a "short" recession as consumers continue battling high inflation and interest rates as their pandemic savings run dry, according to new data released by the U.S. Conference Board on Monday.

The board's U.S. Leading Economic Index declined by 0.8% in October, more than the 0.7% economists polled by Dow Jones expected. The index dropped to 103.9, following a 0.7% decline in September and a 0.5% drop in August.

"The Conference Board expects elevated inflation, high interest rates, and contracting consumer spending — due to depleting pandemic saving and mandatory student loan repayments — to tip the U.S. economy into a very short recession," said Justyna Zabinska-La Monica, a senior manager at The Conference Board over business cycle indicators.

On the plus side, the index has contracted by 3.3% between April and October, a smaller decrease than its 4.5% decline over the previous six months.

The Conference Board's Leading Economic Index signals turning points in the business cycle and where the economy is heading in the near term. 

Despite the dismal outlook, the economy has proven stronger than expected throughout this year. It grew at a staggering 4.9% pace in the third quarter, though many economists expect it to slow dramatically from there.

Many economists aren't expecting a recession in the near-term. Goldman Sachs, for one, puts the odds of a recession at 15% over the next 12 months.

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