The Conference Board reported earlier this month that its Leading Economic Index (LEI) for the U.S., an indicator signaling peaks and troughs in the country’s business cycle, declined 6.7 percent in March to 104.2. The shift in March follows a 0.2-percent decrease in February and a 0.4-percent increase in January. Also this month, the Bureau of Economic Analysis, part of the Commerce Department, reported that the U.S. economy tapered 4.8 percent in first quarter 2020.

“In March, the US LEI registered the largest decline in its 60-year history,” says Ataman Ozyildirim, senior director of economic research at The Conference Board. “The unprecedented and sudden deterioration was broad-based, with the largest negative contributions coming from initial claims for unemployment insurance and stock prices. The sharp drop in the LEI reflects the sudden halting in business activity as a result of the global pandemic and suggests the U.S. economy will be facing a very deep contraction.”

The Conference Board’s Coincident Economic Index, a measure of current economic activity, decreased 0.9 percent in March to 106.6. This growth follows a 0.3-percent increase in February, and a 0.1-percent increase in January. Its Lagging Economic Index, an indicator representing changes that come only after the economy has begun to follow a particular trend, increased 1.2 percent in March to 110.2, following a 0.3-percent increase in February and a 0.1-percent decline in January.

The economy’s first quarter dip was its first since first quarter 2014, and while the 4.8 decline is short of the worst seen during the 2008 financial crisis, the Conference Board expects that due to the large shock the U.S. economy is undergoing, this preliminary data on first quarter will be heavily revised over the coming months and that second quarter 2020’s figures could be worse.

The Bureau of Economic Analysis reports that personal consumption expenditures dropped by 7.6 percent and non-residential investment fell by 8.6 percent in first quarter, indicating that both U.S. consumers and businesses pulled back spending. The data also shows that the drop in consumption was broader than expected, as it went beyond categories like food service and accommodations. Health-care services, for example, saw a very large contraction. Also, personal incomes continued to grow in first quarter but personal savings jumped to 9.6 percent from 7.6 percent in the previous quarter.

Erik Lundh, senior economist at The Conference Board says, “While this contraction is not unexpected, it should be noted that social distancing policies only began to be widely implemented in the United States in mid-March. Because of this, the pandemic’s impact on the U.S. economy was limited to the very end of first quarter and is impacting second quarter much more severely. We therefore expect a much deeper contraction of between -38.8 and -43.7 percent (annualized) in second quarter. The degree of the contraction will depend on the path the virus takes through June and the degree to which the economy is ‘reopened.’”

Lundh notes that the growth forecasts for third quarter and fourth quarter are also highly ambiguous, and will depend on new infection rates, treatment options, testing availability and government policies. The Conference Board presently has three distinct scenarios for U.S. economic growth in 2020 that range from a “U”-shaped fall recovery scenario—yielding an annual GDP contraction of 6.5 percent—to a scenario in which COVID-19 infections resurge in fourth quarter, pulling GDP down 7.4 percent.