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IPFS News Link • Economy - Recession-Depression

10 Red Flags Warn Of Looming Recession

•, by Al Lewis

Clearly, economists were wrong earlier this year when they forecast an economic contraction that has yet to manifest. Could they be wrong now?

To be sure, economic growth, the labor market and consumer spending have proven unexpectedly resilient in the face of rising interest rates and elevated inflation. But there are still plenty of signs a recession might still be on its way.

1. An "uncertain outlook" from leading indicators

Many mainstay economic indicators measure the past. So-called leading indicators reflect what likely lies ahead.

The Conference Board's U.S. Leading Economic Index for July marked its 16th consecutive drop and its longest losing streak since the run-up to the Great Recession in 2007 and 2008.

"The outlook remains highly uncertain," said Justyna Zabinska-La Monica, senior manager of business cycle indicators, at The Conference Board.

"The leading index continues to suggest that economic activity is likely to decelerate and descend into mild contraction in the months ahead."

The index is based on 10 components, ranging from stock prices and interest rates to unemployment claims and consumer expectations for business conditions.

2. Consumer confidence is just a hair above recessionary levels

The Conference Board's consumer confidence index came in at 80.2 in August, hovering just above 80, the level that often signals the U.S. economy is headed for a recession in the coming year.

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