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CONSUMER EXPECTATIONS, SOFTER SPENDING DRAG LEADING ECONOMIC INDEX LOWER

Market participants were forced to make do with a single teensy morsel of economic data on Monday in the form of the Conference Board's (CB) Leading Economic Index (LEI) USLEAD=ECI.

The LEI, an amalgamation of 10 forward-looking economic indicators, including initial jobless claims, ISM new orders, building permits, yield spreads and S&P 500 price performance, dipped by 0.2% in June, steeper than the 0.1% drop analysts expected and a reversal of May's 0.1% gain.

Even so, this marks the third month of declines so far this year, compared with 11 negative readings in 2025.

The index has fallen just 0.3% in the first half of 2026, a significant slowdown from the 1.1% decline in last year's second half.

"The largest positive contribution from the yield spread,” writes Justyna Zabinska-La Monica, CB's senior manager of Business Cycle Indicators, but that was "not enough to offset weak consumer expectations and a drop in building permits across most of its categories."

"Consumer spending is weakening, but strong business investment related to AI is expected to support economic activity while inflation continues to improve," La Monica adds. "Consumers are feeling squeezed because everyday costs — especially gas and energy — are rising faster than their incomes."

According to UMich, consumers would agree:

(Stephen Culp)

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