Briefing Highlights

  • The Conference Board said Thursday that economic growth could be weaker in the first half of the year, dragged down by pessimistic consumer sentiment and weak new orders for manufactured goods.
  • The Leading Economic Index (LEI) fell 0.2% in December, marking the fifth consecutive monthly decline, despite strong stock market performance, an increase in private residential building permits, and positive trends in credit availability and risk composition.
  • "The LEI points to weaker economic activity early this year," said Justyna Zabinska-LaMonica, Senior Manager of Business Cycle Indicators at the Conference Board, in a statement. She noted that an increase in unemployment claims and a decline in average weekly hours in manufacturing also clouded the outlook, adding that the organization forecasts economic growth of 2.1% this year.

Deep Insights

Although the U.S. economy has extended its expansion to nearly six years, it has sent mixed signals in recent months.

Labor market weakness prompted the Federal Reserve to cut interest rates three times in the final three months of 2025, each by 25 basis points, even though inflation remained above the central bank's 2% target.

Data released by the U.S. Bureau of Labor Statistics on February 11 showed that the unemployment rate fell by 0.1 percentage point month-over-month to 4.3% in February, with employers adding 130,000 jobs that month, far exceeding expectations.

More recently, the Labor Department said Thursday that initial jobless claims for the week ending February 14 fell by 23,000 to 206,000, the largest decline since November.

"The labor market remains quite resilient," Minneapolis Fed President Neel Kashkari said Thursday.

"Compared to a year or two ago, the labor market has softened, but looking across the country, the job market looks quite good, in a good to fairly good state," he said in response to questions at an event in Fargo, North Dakota.

Meanwhile, inflation, as measured by the Consumer Price Index (CPI), slowed to 2.4% last month, below expectations and down from 2.7% in December, according to data released Friday by the Bureau of Labor Statistics.

Core inflation, which excludes volatile food and energy prices, eased to 2.5% last month from 2.6%.

"We want to bring inflation down to 2%, and we want as many Americans employed as possible, and sometimes we have to make trade-offs between the two," Kashkari said.

"I would guess that our monetary policy is fairly close to neutral," he said, referring to the level of the federal funds rate that neither stimulates nor restrains economic growth.

The Atlanta Fed said Thursday that the economy could grow at an annualized rate of 3% in the fourth quarter of 2025.

The regional Fed had estimated an annualized growth rate of 3.6% for the quarter on Wednesday, but revised it down after Thursday's LEI data and government data showing a December trade deficit of $70.3 billion.