This is a preview from our last October G3 Leading Indicator Watch (Published Oct 6).
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Our US growth leading indicator is still trending sideways at just under 2% annualized.
That is well below GDPNow, which reflects a bifurcated economy.
AI-linked activity is lifting headline growth, while our leading indicator is picking up the drag from rising input costs and yields.
We are transitioning to a less supportive macro backdrop.
As we previously noted, the first Fed hike is usually a reaction to economic resilience and rarely leads to recession within 12–18 months.
Instead, it signals a late-cycle environment, with narrowing economic strength and narrowing market breadth.
The latest ISM surveys corroborate this.
New orders remain healthy in both services and manufacturing, but they lag the rise in prices.
That implies slowing real volumes, though not yet a recession.
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