What Are the Best Economic Indicators to Watch?
Curious about how the economy is really doing – and where it’s likely headed over the next year? In my view, certain indicators stands out when it comes to predicting economic direction. Here’s what they’re telling me right now.
What’s the Number One Economic Indicator To Watch?
US Focused
If I had to choose one economic indicator that best signals how well the economy is doing and, more importantly, where it’s likely headed, it would be the Conference Board Leading Economic Index (LEI).
The LEI combines 10 key data points into a single number to forecast the direction of the US economy over the next 6 to 12 months. It includes variables like:
- Stock market performance (S&P 500)
- Manufacturing new orders
- Consumer expectations
- Building permits
- Average weekly hours in manufacturing
- Unemployment claims
- Interest rate spreads (10-year vs. Fed Funds)
- Credit conditions
It’s widely considered the best “at-a-glance” indicator of economic momentum and turning points.
Global
At the global level, the JP Morgan Global Manufacturing PMI (released monthly by JP Morgan and S&P Global) could be considered the best high-frequency indicator of global economic direction.
It surveys manufacturers across 40+ countries and represents 85-90% of global GDP.
The index provides forward-looking, real-time data on new orders, output, employment, and inventories, with readings above 50 indicating expansion and below 50 signaling contraction.
What’s It Telling Me About the Economy Right Now – and Over the Next Year?
LEI
As of May 2025 (the June 2025 data comes out on July 21), the US Leading Economic Index (LEI) fell 0.1%, marking its sixth straight monthly decline.
Key weaknesses included consumer expectations, manufacturing orders, jobless claims, and building permits, only slightly offset by stock market gains.
Over the past six months, the LEI dropped 2.7%, indicating slowing economic momentum.
Despite this, the Conference Board expects a soft landing rather than a full recession. It forecasts sluggish GDP growth into 2026.
Global Manufacturing PMI
As of June 2025, the Global Manufacturing PMI stands at 49.8 (up from 49.5 in May). This indicates the global economy remains in mild contraction but is showing signs of improvement.