The six-month growth rate for a top economic indicator has turned positive for the first time in more than four years.
The Conference Board’s Leading Economic Index—also known as the LEI—rose 0.2 percent to 99.5 in July, from an upwardly revised 0.1 percent decline in June. This represented the fourth increase in six months, lifting the six-month growth rate to positive territory.
Typically used as a recession indicator, the LEI is a basket of forward-looking indicators, including building permits, consumer expectations, stock prices, and the yield curve.
“Most components were positive in July except consumer expectations, which continued to be a notable drag on the overall index,” Justyna Zabinska-LaMonica, senior manager at The Conference Board, said in an Aug. 20 statement.
Various surveys have indicated weakened consumer confidence driven by ongoing frustrations over pocketbook issues, including elevated gasoline prices.
As of Aug. 20, the national average for a gallon of gasoline is $4.10.
Looking ahead, the economy should continue expanding, Zabinska-LaMonica said.
“But growth is expected to be driven by business investments in AI, while the higher cost of living may reduce consumer spending, especially by lower- and middle-income households,” she said.
Consumers were a bit more cautious about opening their wallets last month amid renewed inflationary pressures.
July’s retail sales unexpectedly declined 0.6 percent, from a 0.2 percent gain in June. Excluding auto dealers, building materials, food services, and gasoline stations, core retail sales, which are used in GDP calculations, also fell 0.4 percent.
Retail giant Walmart saw its slowest sales pace in more than six years, the company reported in its latest earnings report on Aug. 20. This could indicate that shoppers are under strain, but Walmart intends to bring customers back by using tariff refunds to lower prices.
But while the headline numbers could suggest a more reluctant consumer, Bank of America economists note that the decline might have been driven by seasonal factors.
Amazon moved up its Prime Day promotions to June, while World Cup-related spending faded as the month progressed.
August transactions could rebound as household balance sheets remain steady.
“Against this backdrop, consumer financial health looks solid,” the bank’s economists wrote in this month’s Consumer Checkpoint report.
Groceries are seen at a Walmart supermarket in Houston on May 15, 2025. Ronaldo Schemidt/AFP via Getty Images
“Despite cost-of-living pressures from areas such as gasoline, the share of households paying off their credit card bills in full each month has risen. And there is little sign of an acceleration in households drawing upon their savings.”
The Conference Board’s other key metrics—the Coincident Economic Index and the Lagging Economic Index—also ticked up by 0.2 percent in July.
The Coincident Index tracks real‑time economic activity—payrolls, personal income (ex‑transfers), manufacturing and trade sales, and industrial production. The Lagging Index is built from slow‑moving, backward‑looking measures like unemployment duration, unit labor costs, and the inventories‑to‑sales ratio.
Growth Outlook
The U.S. economy, meanwhile, is projected to grow 4 percent in the third quarter, driven by consumer spending, business investment, and changes in private inventories, according to the Atlanta Federal Reserve’s GDPNow model.
Economic growth decelerated to 1.5 percent in the second quarter, down from 2.1 percent in the first three months of 2026.
This year’s private-sector artificial intelligence (AI) spending has significantly contributed to growth prospects. Scores of companies—large and small—plan to boost capex.
Despite concerns about circular financing in the tech sector, market watchers say that hyperscalers, the large companies that run data networks and global data centers, could indicate what is actually happening in the broader economy.
“Hyperscalers probably offer the best vantage point into demand. They are putting real dollars behind the infrastructure. They are buying supply, capacity, the capex based on the demand they’re seeing,” Evan Schlossman, principal at Neostellar, said in an emailed note to The Epoch Times.
“We’re seeing extremely strong demand for the ultimate use case and the [return on investment] of AI. I think people are seeing that in their everyday lives as well. That’s really how we’re looking at the capex.”
Alternatively, the New York Fed estimates a more modest 2.1 percent growth rate for the July-September period.
Bill Pan contributed to this report.
