The U.S. stock market is being significantly shaken by the tariff war of the Donald Trump administration. Kang Hyun-ki, a researcher at DB Securities, noted, "It has crossed the critical threshold of economic decline for some time now," adding that "it could drop as much as the Conference Board's Leading Economic Index (LEI)" on the 7th.
Researcher Kang pointed out that the 'nominal Gross Domestic Product (GDP) growth rate' is nearing a state lower than the 'benchmark interest rate,' indicating that when people borrow money to engage in economic activities, the average revenue falls below that interest rate.
Researcher Kang said, "The decline in U.S. economic sentiment indicators could lead to a subsequent drop in their economic real indicators," and added, "The endpoint will be signaled by the leading economic index."
The leading economic index is calculated based on ten economic-related indicators, including finance, dwellings, and employment. Typically, if the leading economic index declines for six consecutive months, it is considered that the economy has entered a contraction phase. In February of this year, the Conference Board's leading economic index recorded 101.1, marking the lowest point since the COVID-19 pandemic.
Historically, the leading economic index and the U.S. stock market have shown similar movements. Researcher Kang stated, "It is true that recently there have been criticisms that the leading economic index does not adequately reflect the U.S. economy, but it is also hard to view it as moving separately from future economic trends," and added, "We cannot rule out the possibility that the U.S. stock market may show a downward trend called a decline, beyond mere adjustments."