Why this matters: After observing a third consecutive disappointing spring season of sales, leasing, and mortgage originations, real estate agents and brokers looking to weather the economic downturn must learn to read a variety of economic factors. And importantly, become familiar with the institution charged with labeling and evaluating recessions, thus influencing consumers to be cautious or careless with their income.
Recession spotting
From hemlines to unemployment lines, a term like recession indicator is thrown around the headlines as a perpetual looming threat. But unlike economic trends, a recession is declared, not by public opinion, but by a group of experts making up the Conference Board.
This organization has the latitude to interpret key economic factors before announcing a recession. It may be a surprise to some, but a recession is not the result of one standard definition, and while a recession is generally understood as a couple quarters of negative gross domestic product (GDP) growth, it is up to the Conference Board to retroactively announce a recession.
Driving the Conference Board’s decision are ten factors making up the Leading Economic Index (LEI) for the US.
These factors examine:
- average weekly hours in manufacturing;
- average weekly initial claims for unemployment insurance;
- manufacturers’ new orders for consumer goods and materials;
- manufacturers’ new orders for nondefense capital goods excluding aircraft orders;
- building permits for residential housing;
- the Institute for Supply Management (ISM) Index of New Orders;
- the S&P 500 Index of Stock Prices;
- the Conference Board’s Leading Credit Index;
- the interest rate spread (10-year Treasury bonds rate minus the federal funds rate); and
- average consumer expectations for business conditions.
These indicators, especially the last one, point to the subjective nature of recession spotting. The experts at the Conference Board balance indications from manufacturing growth against the levels of general unemployment or against contradictory indications from construction starts. It is up the board to decide whether growth in one sector outweighs the negatives felt elsewhere.
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Inspecting the retrospective
The Conference Board is charged with labeling economic conditions as a recession after the fact. They do not predict, forecast or project when a recession will start. They only examine data for events which have already happened in order to reach their conclusion.
One of the factors in their decision is consumer confidence, a self-fulfilling prophecy, as members of the public tend to be more worried about coping with a recession — once one is declared. Holding off on the “recession” label has perceived benefits, especially for keeping the exchange of commerce moving rather than intimidating consumers into freezing their spending.
When factors are contradictory to growth, like they are now, it is especially important not to induce pessimism needlessly. Still, just because a factor appears stable, like stock prices, doesn’t detract from real concerns.
The LEI for the US dipped 0.1% in July 2025. This continues the contraction of 2.7% overall since January. 2025 is set to rise over 2024 by 1.6% and this month saw increased claims for unemployment insurance.
The most recent word on the LEI on August 21, 2025 still avoids declaring a recession at the time of publication, even as job numbers seem poised for a recession.
For real estate agents and brokers, the undeclared recession is still enough to motivate buyers to hold out as they increasingly see a chance at lower prices in the future. As soon as a recession is called, sellers who relax their grip on old, outdated asking prices will witness a return of buyers who are currently waiting on the sidelines.
With 2024’s high interest rates giving way to recessionary conditions, buyer purchasing power is getting a boost. Together with recession era prices in the near future, the scales are tipped towards sales and mortgage originations. As business activity slows, leasing is not likely to stop slipping until recovery sets in, when the conference board declares an end to the yet-to-be-declared recession.
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Recent Context
To make these recession lessons even more familiar, hardly any time has passed since the most recent recession. Barely a few years ago, 2020 marked the shortest recession ever. With things turning south in 2019, the normal impacts of a recession were quickly overridden by the sudden pandemic lockdown, followed by a massive cash-fueled stimulus for consumer spending and business hiring. Thus, an economic tsunami event produced hyper-inflation as expected.
All the monetary and fiscal stimulus during the pandemic kept the economy from collapsing but quickly overran the typical business cycle’s shift downward in 2019.
Before lockdowns changed working conditions, families and public life, 2019’s slowdown in real estate activity predicted problems a year out. The inversion of the yield spread — when short term rates exceed the rate of long term bonds — dropped below the 1.21% level at which the probability of recession begins. Just before 2020, the spread turned negative.
Since then, the 2021 stimulus-induced recovery only set up 2022 for another sudden drop, where the yield spread fell to the lowest point since the 1980s.
With buyers sensing a change from a seller market to a buyer market since 2022, this concluding business cycle also contends with extreme unpredictable changes to federal policy management, global trade war taxes, attacks on historical immigration and the presence of high mortgage rates.
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Meet the team
With a vague name like Conference Board, you would suspect a nondescript and dry history, but the organization dates back to 1916 when it was the National Bureau of Economic Research (NBER). Since then, it’s been actively engaged during all major US events and updates its economic indicators as America’s economy and population shifts and changes.
Older predictors placed greater emphasis on manufacturing, while today they also look to the stock market. Beyond the US, Global Leading Indicators are provided publicly for other nations’ and regions’ economies that are studied and evaluated by the Conference Board.
An interactive timeline of its own history walks through its championing of worker safety, development of resources for all businesses and independent research through the years.
But beyond the name change and dialing into the strongest contemporary predictors, this organization stayed focused on its mission as a nonpartisan, US-based research nonprofit.
Critical to that success is its independence.
Considering its staunch resistance to forecasting recessions, it has maintained its shield from peer pressure. But with executive attacks on Federal Reserve monetary polices and reporting by the Bureau of Labor Statistics (an independent body within the US Department of Labor), a sudden shift of both executive policy and powers puts the federal government on display as interfering in previously independent agencies.
While the Conference Board is a private organization, its resources and data are open to any company, large or small. And their innovation on tracking and defining business cycles reflects prevailing conditions from its five main centers:
- the Committee for Economic Development;
- Corporate Governance;
- Economy, Strategy, and Finance;
- Human Capital; and
- Marketing and Communications.
Where real estate will feel it first
These concerns are not new to those plugged into California real estate, as the real estate market has been in a recession by any standard for the last 36 months with no end in sight.
Property buyers are already sitting out on purchases, motivated to lean back by both high prices and high mortgage rates. However, the lack of buyer purchasing power signals to sellers that they’ll need to budge on price to induce buyers to act. This lack of seller flexibility, also known as the sticky price phenomenon, leads to buyers waiting until they see prices bottom and begin to recover before they’re confident they’re getting the price that represents the property’s core value.
With companies now hesitant to take on new hires, there’s a parallel decrease in tenant and owner turnover. The lack of confidence in the uncertain economy translates to tenants and homeowners alike not wanting to take on a higher cost of living or accept the added price tag moving entails. This will result in increased vacant units, more occupants per unit to save money and a rising for-sale inventory.
All of these pressures cause prices to drop.
While the ebb and flow of real estate property prices is part of a natural progression in a business cycle, new agents and brokers need to be skilled enough to glean foresight based on available data and provide informed advice to their clients. Reliable and independently interpreted indicators are vital.
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