A widely monitored indicator of future economic activity showed a broad-based rise in July, indicating that the economy is ready for expansion even as it deals with an increase in coronavirus infections as well as a scarcity of labor and supplies.
In July, a leading indicator of future economic activity in the United States rose, indicating that the economy has continued to recover from the recession caused by the coronavirus pandemic, despite a rebound in cases driven by the Delta form of the virus.
Indicators Ahead Of The Curve Continued Economic Growth Are Signaled
Following the release of its index of leading economic indicators (LEI) on Thursday, the Conference Board said that it increased by 0.9 percent in the previous month to 116.0. A 0.8 percent rise had been predicted by economists surveyed by the news agency Reuters.
Despite the fact that the United States economy is expected to expand at its highest rate since the 1980s this year, there are indications that the recovery may be slowing down. Supply-chain bottlenecks continue to stifle industrial expansion, and consumer confidence fell to a decade-low in early August as Americans expressed gloomy outlooks on a range of issues ranging from personal finances to inflation and jobs.
Meanwhile, the Labor Department reported last week that consumer price hikes moderated in July but that overall inflation remained at a historically high level as a result of supply-chain disruptions as well as increased demand for travel-related products and services.
According to Ataman Ozyildirim, senior director of economic research at the Conference Board, the United States Leading Economic Index (LEI) saw another significant increase in July, with all components contributing favorably.
The Delta variation and growing inflation concerns, he said, may cause headwinds for the United States’ economy in the short term; nevertheless, they anticipate real GDP growth for 2021 to reach 6.0 percent year-over-year, before slowing to a still-robust 4.0 percent pace in 2022. Following a 0.5 percent gain in June, the Conference Board’s Leading Economic Index increased by 0.9 percent to 116, above consensus expectations of a 0.7 percent increase. This follows a 0.5 percent increase in June.
According to Ataman Ozyildirim, senior director of economic research at the Federal Reserve Board of Governors, the United States Leading Economic Index (LEI) saw another significant increase in July, with all components contributing favorably.
The general upward trend in the Leading Index, which began with the end of the pandemic-induced recession in April 2020 and continues to the present, is consistent with robust economic growth in the second half of the year. We anticipate real GDP growth to reach 6.0 percent year on year in 2021, before slowing to a still-strong 4.0 percent growth rate in 2022, despite the fact that the Delta variant and increasing inflation concerns may provide headwinds for the US economy in the short future.
According to the Bureau of Labour Statistics, the economy has recovered well from the pandemic-induced shutdowns that occurred 17 months ago, with the nation’s gross domestic product growing at an annual rate of more than 6 percent in back-to-back quarters. However, it has encountered stumbling obstacles, including a scarcity of critical raw materials such as semiconductors and timber, as well as a lack of available employees to cover more than 10 million vacant positions.
As a result, prices for goods such as airline tickets, secondhand automobiles, real estate, and some food items have increased. Consumer prices have been growing at a pace of more than 5 percent per year for the last several years, although there are some signs that this may be decreasing.
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