The data does not show that the US is in a recession, analysts say.
Ray is early indication of where the economy is heading over the coming months.
Justina Zabinsca La Monica, senior manager of the conference committee’s business cycle indicator, said the decline in March “pointed to slower economic activity ahead.”
For the six-month period ending in March, Ray signed 1.2%, a 2.3% decline over the past six months.
Three components of the index registered a massive decline last month. This has captured the biggest monthly decline since September 2022, new manufacturing orders, stock prices and stock prices that have achieved consumer expectations.
The decline in these components came from “increasing economic uncertainty ahead of the disputed tariff announcement.”
Related Stories
The think tank revised its US GDP estimate to 1.6% this year, “it’s somewhat below the economy’s potential,” Zabinska-Lamonica said, adding that the data does not suggest that the country will fall into a recession or face such a situation anytime soon.
“Slow forecast growth rates reflect the impact of deepening the trade war, which could lead to higher inflation, disruption in supply chains, lower investments and spending, and weaker labor markets.”
For every 10% of new tariffs on foreign goods, he said, American consumers can show a one-time price rise below 2%, citing a survey showing that the roughly 20% tariffs imposed on China during the first Trump period led to a price rise of 0.7%.
“If we can put a 20% tariff, have foreigners pay it, and use that money to lower the government’s deficit and keep taxes low here, this is a very unique formula that hasn’t been tested in this country for a long time,” Bescent said.
Tom Ozimek contributed to the report.
