Dive Brief:

• Economic growth will likely be soft during the first half of this year, held back by gloomy consumer sentiments and weak new orders for manufactured goods, the Conference Board said Thursday.
• The Leading Economic Index fell 0.2% in December for its fifth straight monthly decline despite strength in equity markets, a rise in building permits for private housing and a positive mix of credit availability and risk, the Conference Board said.
• “The LEI signals weaker economic activity at the start of this year,” Justyna Zabinska-LaMonica, the Conference Board’s senior manager for business cycle indicators, said in a statement. An increase in unemployment claims and decline in average weekly hours in manufacturing also dimmed the outlook, she said, noting that the Conference Board forecasts 2.1% economic growth this year.

Dive Insight:

The economy, while continuing a nearly six-year-old expansion, has spun off mixed signals in recent months.

Weakness in the labor market prompted the Federal Reserve to cut borrowing costs by a quarter percentage point three times in the final months of 2025 even though inflation remains above the central bank’s 2% target.

Unemployment fell last month by 0.1 percentage point to 4.3%, the Bureau of Labor Statistics said on Feb. 11, as employers added 130,000 jobs in a hiring surge that far exceeded expectations.

More recently, initial claims for unemployment insurance declined during the week ended Feb. 14 by the most since November, the Labor Department said Thursday. Applications for benefits fell by 23,000 to 206,000.

“The labor market has remained pretty resilient,” Minneapolis Fed President Neel Kashkari said Thursday.

“It's a softer labor market than it was a year or two ago, but as you look out across the country, the job market seems pretty, pretty good, decent to pretty good,” he said, answering a question during an event in Fargo, North Dakota.

At the same time, inflation, as measured by the consumer price index slowed last month to a lower-than-forecast 2.4% from 2.7% in December, the Bureau of Labor Statistics said Friday.

So-called core inflation, which excludes volatile food and energy prices, cooled to 2.5% last month from 2.6% during the prior month.

“We want to get inflation at 2% and we want to have as many Americans working as possible, and sometimes we have to trade these things off,” Kashkari said.

“My guess is we're pretty close to neutral on where our monetary policy is,” he said, referring to a level of the federal funds rate that neither spurs nor slows economic growth.

The economy probably grew at a 3% annual rate during the fourth quarter of 2025, the Atlanta Fed said Thursday.

The district bank on Wednesday estimated a 3.6% annual rate of growth for the quarter before release Thursday of the LEI and government data showing a $70.3 billion trade deficit in December.