WASHINGTON, July 20 (Xinhua) -- The U.S. leading economic index (LEI) declined in June, according to data published Monday by the Conference Board.
The LEI dropped by 0.2 percent in June but was down by only 0.3 percent over the first half of this year. That's a much smaller rate of decline than its 1.1 percent contraction over the second half of last year, the Conference Board's report found.
The LEI is a predictive tool designed to signal turning points in the business cycle. By measuring 10 key economic components, including stock prices, building permits and consumer expectations, it indicates where the broader economy is heading in the near term.
A consistent rise in the LEI indicates approaching economic expansion, while a sustained decline suggests slowing growth and increased recession risk.
"In June, the Leading Economic Index for the U.S. declined and partially reversed gains registered in May and April," said Justyna Zabinska-La Monica, senior manager at the Conference Board.
However, despite the recent decline, the LEI's six- and 12-month growth rates, while negative, were stable, Zabinska-La Monica argued.
"Consumer spending is weakening, but strong business investment related to AI is expected to support economic activity while inflation continues to improve," Zabinska-La Monica said.
At the same time, many economists believe the economy is in the midst of an AI investment bubble. If that's true, the AI investment boom may not be a sustainable way to support economic activity.
Indeed, some experts contend the AI bubble is a wildcard.
Dean Baker, co-founder of the Center for Economic and Policy Research, told Xinhua, "While it is impossible to know how long that will go on for, when it bursts, it will throw the economy into a recession. Otherwise, we will see modest growth continue for the rest of 2026 and into 2027."
The other factor is the conflict in Iran.
"If that continues much longer, oil prices will soar, which will seriously slow growth and quite possibly push the economy into recession," Baker said.
Meanwhile, Americans continue to complain that their single most vexing economic concern is the cost of living.
Many Americans long for the pre-COVID era when prices were significantly lower than now, homes were affordable and food was considerably less expensive.
Indeed, some figures suggest overall inflation is up over 30 percent from 2019. The actual cost of buying a home, once higher interest rates are calculated, is up over 60 percent from 2019, according to some figures.
U.S. President Donald Trump campaigned on fixing the massive inflation that has occurred since the COVID era. As such, cost-of-living issues could harm Republicans in the midterm elections, experts said.
Brookings Institution Senior Fellow Darrell West told Xinhua that over the past decade, prices have risen a lot while personal incomes have not kept up. These facts create serious problems for Republicans in November. ■