Investors Growing Weary Of 'No-Show' Recession: Why This Analyst Says Economy-Wide Downturn Is Less Likely

The Conference Board's leading economic index released Thursday showed an extended declining streak but an analyst suggested he wasn't concerned.

The LEI is a composite index consisting of different variables that is intended to predict turning points in the economy. This predictive index is highly correlated with GDP.

What Happened: Despite the LEI declining for 14 months on a trot, there is little evidence the U.S. is headed toward recession, said Yardeni Research. The firm noted that the index of coincident economic indicators, which point to current conditions, rose to a record high.

The Conference Board said in a statement that it anticipates a recession starting in the third quarter of 2023.

Yardeni Research analysts, however, think otherwise. “We believe we've been in a rolling recession, making an economy-wide recession less likely,” the firm said.

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Strong Economic Signals: Yardeni Research noted that job openings remain very high. But new jobless claims, which is a component of the LEI, came in at 264,000 in the week ended June 17, unchanged from the previous week. This marked the highest level of initial claims activity since Oct. 2021.

The yield curve, another component of the LEI, has been a negative contributor since it inverted last summer, the firm said. Although it accurately predicted the banking crisis in March, an economy-wide credit crunch or recession has not materialized, it said.

The firms also noted that the S&P 500 Index, another LEI component, has been rallying since last October. “Investors are growing weary of waiting for a widely-anticipated recession that remains a no-show,” it added.

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