New York, NY
A comprehensive gauge of the health of the US economy fell in August for a sixth consecutive month, reinforcing concerns about a possible recession.
The Conference Board said Thursday that the United States’ leading economic index declined last month. The index, which tracks a range of gauges including activity in the labor market, manufacturing, financial markets and housing, is designed to detect when recessions are coming.
Among the index’s 10 components, all but two were in negative territory over the past six months.
Ataman Ozyildirim, chief economist at The Conference Board, said the six-month decline in this index “potentially points to a recession.”
“Economic activity will continue to slow more broadly across the U.S. economy and is likely to contract. A major driver of this slowdown has been the Federal Reserve’s rapid tightening of monetary policy to combat inflationary pressures,” Ozyildirim said, adding that the Conference Board predicted a recession in the coming quarters. he added.
Recessions are officially declared by a panel of economists at the National Bureau of Economic Research and this determination comes long after the recession actually begins.
“The dynamics of the recession are gathering steam,” Gurleen Chadha, US economist at Oxford Economics, wrote on Thursday. “Corporations should take back the reigns on the labor market, slowing job growth.”
Fears of an imminent recession to crush inflation, dramatic Fed interest rate hikes and quarter after quarter of falling gross domestic product have contributed to the first half of this year.
However, many economists say the labor market remains too strong for the U.S. economy to be in recession. In recessions, companies tend to resort to widespread layoffs, and economic reports indicate that this is not happening right now.
New numbers released Thursday showed initial jobless claims rose slightly last week and remain near their lowest level since May.