The leading economic index fell 0.8% in October, marking its 19th month of decline, but the US economy remains resilient and shows no signs of a recession. Economists predicted a 0.7% drop in the index, which measures 10 indicators that determine whether the economy is improving or deteriorating. Despite this, the US grew at an impressive 4.9% annual pace in the third quarter. However, maintaining this momentum may be challenging as interest rates remain high due to inflation concerns. The Federal Reserve has already raised a key short-term interest rate to curb inflation, and higher borrowing costs can slow down the economy if not trigger an outright recession.
Looking ahead, experts predict that elevated inflation, high interest rates, and contracting consumer spending will tip the US economy into a very short recession. This is because depleting pandemic savings and mandatory student loan repayments have created challenges for consumers and businesses alike. Despite this challenge, market reaction was positive as the Dow Jones Industrial Average DJIA and S&P 500 SPX rose on Monday trading.