Key Takeaways

  • A series of economic data highlights risks to growth in the coming months, with weakening manufacturing orders and deteriorating consumer expectations posing the biggest drags, the Conference Board said Thursday.
  • The Leading Economic Index, composed of 10 indicators including building permits and stock market trends, "continues to point to growth headwinds," Justyna Zabinska-LaMonica, senior manager of business cycle indicators at the organization, said in a statement.
  • Although the index shows that growth drags have eased over the past year, the Conference Board forecasts that U.S. economic expansion will slow to 2% in 2025 from 2.8% in 2024. Zabinska-LaMonica also noted that this year "there is tremendous policy uncertainty, as well as a notable pullback in consumer confidence and spending."

Deeper Dive

The Federal Reserve on Wednesday cut its 2025 growth forecast to 1.7% from 2.1% in December, with policymakers saying "uncertainty around the economic outlook has increased."

Despite lowering growth expectations, policymakers decided to keep the federal funds rate in a range of 4.25% to 4.5%.

"Growth appears to be running somewhat slower, and consumer spending is also decelerating moderately but remains at a solid level," Fed Chair Jerome Powell said at a press conference after the two-day Federal Open Market Committee meeting.

Economists at several institutions have recently warned of trade war risks and forecast slower growth this year. Goldman Sachs projects growth of 1.7%, while the Organisation for Economic Co-operation and Development expects GDP growth of 2.2%.

"Current geopolitical and policy uncertainty is high, posing significant risks to the baseline projections for the United States and many other economies around the world," the OECD said.

U.S. President Donald Trump said he plans to announce reciprocal tariffs on U.S. trading partners on April 2—which he called "America's liberation day."

Amid weaker growth forecasts, the U.S. labor market is showing signs of resilience.

Initial jobless claims rose by 2,000 to 223,000 in the week ended March 15, data from the U.S. Labor Department showed Thursday.

Labor Department data also showed that continuing claims, representing unemployed workers receiving unemployment benefits, rose to 1.89 million in the week ended March 8. The figure was in line with expectations.

"Labor market conditions remain solid," Powell said. He noted that the economy has added an average of 200,000 jobs per month over the past three months, and the unemployment rate is currently 4.1%, having stayed within a narrow range over the past year.