U.S. Leading Indicators Slip Again, but AI Investment Supports Growth Outlook — Evening Brief – 07.20.26

The U.S. economy showed further signs of slowing in June, but underlying fundamentals remain resilient as robust business investment tied to artificial intelligence continues to offset softer consumer sentiment and housing activity, according to The Conference Board’s latest Leading Economic Index (LEI).

The LEI declined 0.2% in June to 99.1, slightly weaker than economists’ expectations for a 0.1% decline and reversing part of the gains recorded over the previous two months. Despite the monthly setback, the Conference Board noted that the pace of deterioration remains significantly slower than the 1.1% contraction experienced during the second half of 2025.

“While some components of the LEI were little changed, the largest positive contribution from the yield spread, followed by marginal positive input from the remaining financial components, were not enough to offset weak consumer expectations and a drop in building permits across most of its categories,” said Justyna Zabinska-La Monica, senior manager of business cycle indicators at The Conference Board.

Although both the six-month and 12-month growth rates for the LEI remained negative, they have stabilized, suggesting economic momentum has moderated rather than deteriorated sharply.

The Conference Board said continued investment in artificial intelligence infrastructure and related business spending is providing an important source of economic support as inflation gradually eases. Reflecting that resilience, the organization raised its forecast for U.S. gross domestic product growth in 2026 to 1.9%, up from its previous estimate of 1.8%.

Other economic indicators also pointed to a stable expansion. The Coincident Economic Index, which measures current economic conditions, increased 0.2% to 114.6, matching May’s gain. Meanwhile, the Lagging Economic Index was unchanged at 120.5 after declining 0.1% in the previous month.