The U.S. economy’s growth softened in January, under the weight of the Omicron variant, rising prices and other issues. This assessment from The Conference Board is supported by the January 0.3% decrease in its Leading Economic Index (LEI) for the U.S.The closing months of 2021, December and November, registered 0.7% and 0.8% increases, respectively, and signs point to further growth as 2022 progresses.

“The U.S. LEI posted a small decline in January, as the Omicron wave, rising prices and supply chain disruptions took their toll,” says Ataman Ozyildirim, senior director of economic research at The Conference Board. “Initial claims for unemployment insurance, consumers’ outlook and declines in stock prices, and the average work week in manufacturing all contributed to the decline—the first since February 2021.

“Despite this month’s decline and a deceleration in the LEI’s six-month growth rate, widespread strengths among the leading indicators still point to continued, albeit slower, economic growth into the spring. However, labor shortages, inflation and the potential of new COVID-19 variants pose risks to growth in the near term. The Conference Board forecasts GDP growth for Q1 to slow somewhat from the very rapid pace of Q4 2021. Still, the U.S. economy is projected to expand by a robust 3.5% year-over-year in 2022—well above the pre-pandemic growth rate, which averaged around 2%.”

The Conference Board’s composite economic indexes are designed to signal peaks and troughs in the business cycle. Its Coincident Economic Index, a measure of current economic activity, for the U.S. increased by 0.5 percent in January to 107.9, following a 0.2 percent increase in both December and November. The Lagging Economic Index, an indicator representing changes that come only after the economy has begun to follow a particular trend, for the U.S. increased by 0.7 percent in January to 110.2, following a 0.4 percent increase in December and a 0.1 percent increase in November.