Is the Trump effect returning? The US leading economic indicators have turned positive for the first time in nearly three years, no longer indicating that the economy will fall into recession
The Leading Economic Index (LEI) in the United States turned positive for the first time after the November elections, indicating an improvement in the economic outlook. Building permits and the stock market were the main driving factors, but ISM new orders and the U.S. Treasury yield curve still weighed on the index. The Conference Board predicts that U.S. GDP will grow by 2.7% in 2024, potentially slowing to 2.0% in 2025. Market confidence has increased following Trump's election, with the stock market continuing to rise as Trump promised to revitalize the economy through tax cuts and other policies
Data shows that the Leading Economic Index (LEI) in the United States has experienced positive growth for the first time since the November elections, marking the first such occurrence since February 2022. Analysts believe this may indicate an improvement in the outlook for the U.S. economy.
Among the factors driving the increase in the index, building permits and the stock market are the main positive contributors, while ISM new orders and the U.S. Treasury yield curve continue to exert significant downward pressure on the index.
With the November index turning positive, the LEI no longer indicates that the U.S. economy is on the verge of recession.
Justyna Zabinska-La Monica, Senior Manager of Business Cycle Indicators at The Conference Board, stated,
"Overall, the rise in the LEI is a positive signal for future economic activity in the U.S. The Conference Board currently forecasts that U.S. GDP growth will reach 2.7% in 2024, but the growth rate may slow to 2.0% by 2025."
Whether this phenomenon is related to the increase in market confidence following Trump's election remains to be seen. However, a previous article from Wall Street Insight noted that during Trump's first presidential term, the U.S. stock market repeatedly hit new highs; polls showed that voters generally supported Trump's economic proposals, which included further tax cuts and deregulation aimed at boosting corporate vitality and driving economic growth. Since the election results were announced, the S&P 500 index has continued to rise, with the market showing strong expectations for Trump's upcoming economic policies.
Last week, Trump also promised business leaders at the New York Stock Exchange's bell-ringing ceremony that he would lead the U.S. toward "unprecedented economic prosperity," reiterating his plans to revitalize the U.S. economy through a series of policies, particularly in areas such as tax cuts, energy development, and the stock market, including incentives for companies to return to the U.S., increasing oil production, controlling inflation, promoting the stock market, and strengthening cooperation with tech giants.
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