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Oct. 22, 2020, 10:31 a.m. EDT

Leading economic indicators signal slowing U.S. growth in September

U.S. economic growth could be losing momentum’

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By Jeffry Bartash, MarketWatch


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The reopening of the U.S. economy spurred rapid growth over the summer, but the pace of expansion is slowing.

The numbers: A broad measure of the economy grew again in September, but the slower pace of expansion likely signals that the U.S. lost some momentum, a new survey shows.

The leading economic index rose 0.7% last month, following increases of 1.4% in August and 2% in July, the Conference Board said Thursday.

The index had suffered historic declines this year early in the coronavirus pandemic.

Read:Stimulus stalemate threatens more hardship and slower recovery, economists warn

And : ‘I’m terrified, frankly’: These people are depending on another stimulus to stay afloat

What happened: The advance in the leading index in September was driven by a decline in new jobless claims — aka layoffs — and an increase in builder permits to build new houses.

Read: Jobless claims fall to new pandemic low of 787,000 as California comes back on line

Yet most of the indicators in the leading index appear to be weakening again. The LEI is a weighted gauge of 10 indicators designed to signal business-cycle peaks and valleys.

See: MarketWatch Economic Calendar

Big picture: U.S. economic growth was bound to slow after a huge surge once it reopened in May. The question is just how much.

Many economists predict sharply lower growth in the final three months of 2020 without another major financial stimulus from Washington, but so far the economy has held up better than expected despite the expiration of most federal aid in July.

What they are saying?: “The decelerating pace of improvement suggests the U.S. economy could be losing momentum heading into the final quarter of 2020,” said Ataman Ozyildirim, director of business cycles research at the board.

Market reaction: The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.63% and S&P 500 /zigman2/quotes/210599714/realtime SPX +1.13% fell slightly in Thursday trades.

/zigman2/quotes/210598065/realtime
US : Dow Jones Global
29,823.92
+185.28 +0.63%
Volume: 435.44M
Dec. 1, 2020 5:20p
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/zigman2/quotes/210599714/realtime
US : S&P US
3,662.45
+40.82 +1.13%
Volume: 2.64B
Dec. 1, 2020 5:19p
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Jeffry Bartash is a reporter for MarketWatch in Washington.

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