The Economy's Top Warning Sign Just Flashed Red for Working Families

The latest economic data hit like a cold splash of water. In March 2025, the Conference Board’s Leading Economic Index (LEI) fell by 0.7%, worse than the expected 0.5% decline. This isn’t just a number; it’s a warning. The LEI, a trusted gauge of where the economy is headed, points to a slowdown that could upend the lives of working families. For advocates of economic justice, this moment demands attention. The data reflect a broader truth: policy choices are steering the nation toward uncertainty, and the most vulnerable stand to lose the most.

This drop in the LEI comes at a precarious time. Consumer confidence is crumbling, stock prices are wobbling, and new manufacturing orders are drying up. These aren’t abstract metrics; they translate to real-world pain. Families already stretched thin by rising costs now face the prospect of slower job growth and shrinking opportunities. The question isn’t whether the economy is faltering, but whether policymakers will act to shield those who can least afford another setback.

The decline follows a pattern. Over the past six months, the LEI has slid 1.2%, signaling a persistent loss of momentum. Yet, the Biden-era policies of investment in infrastructure, green energy, and worker protections are no longer in place to cushion the blow. Instead, the current administration’s aggressive trade policies, particularly new tariffs, are pouring fuel on an already smoldering fire. For those who believe in equitable growth, this trajectory is a call to arms.

The stakes couldn’t be higher. A faltering economy doesn’t just threaten abstract GDP figures; it jeopardizes the dreams of millions. Homeownership, college savings, and retirement plans are slipping out of reach for too many. The LEI’s warning is clear: without swift, bold action, the nation risks sliding into a preventable downturn that will hit hardest those already struggling to get by.

At the heart of this economic unease lies a policy choice that’s hard to defend: sweeping new tariffs. These trade barriers, championed by President Trump in his second term, are driving up costs for everyday goods. Goldman Sachs and Morgan Stanley now project core inflation could climb to 3.5% and 2.7%, respectively, as tariffs ripple through supply chains. Apparel prices alone are expected to surge by 17%. For low-income households, this isn’t just an inconvenience; it’s a direct assault on their ability to afford basics like clothing and food.

The evidence is stark. The average American household stands to lose $3,800 annually in purchasing power due to these tariff-driven price hikes. Food inflation, already at 3% in March, is accelerating, squeezing budgets further. While energy prices have eased, offering some relief, the broader trend is unmistakable: tariffs are making life more expensive, and those at the bottom of the economic ladder are bearing the brunt. Advocates for economic fairness see this as a betrayal of the working class, who were promised prosperity but are now facing higher costs.

Opponents of tariffs, including many economists and consumer advocates, argue that these policies are regressive by design. They disproportionately harm lower-income families, who spend a larger share of their income on goods affected by price increases. Meanwhile, the promised benefits—like a manufacturing boom—remain elusive. New manufacturing orders, a key LEI component, are declining, undermining claims that tariffs will revive American industry. The reality is that these policies are destabilizing the economy while failing to deliver on their lofty promises.

Supporters of the administration’s approach might argue that tariffs protect American jobs by leveling the playing field against foreign competition. But this ignores the broader fallout. Global trade disruptions and financial market volatility, as noted by the Brookings-FT TIGER index, are dampening business confidence worldwide. The U.S. economy, deeply tied to global markets, can’t thrive in isolation. By prioritizing short-term political wins over long-term stability, tariff advocates are gambling with the livelihoods of millions.

Beyond the numbers, the LEI’s decline signals a human toll. The labor market, while still resilient with 228,000 jobs added in March, is showing cracks. The unemployment rate ticked up to 4.2%, and wage growth slowed to 3.8%. For workers in healthcare, transportation, and warehousing, job gains offer some hope. But federal government layoffs and business caution signal trouble ahead. If the economy slows further, those gains could evaporate, leaving workers in precarious positions.

Consumer expectations, another LEI component, have plummeted. This isn’t surprising when 77% of Americans say their incomes aren’t keeping pace with rising costs. For families dreaming of buying a home, the reality is grim: mortgage affordability is at its worst since the mid-2000s. The Federal Reserve, cautious about cutting rates amid tariff-driven inflation, is unlikely to ease borrowing costs soon. This leaves aspiring homeowners, particularly young and minority families, locked out of the market.

The risk of recession looms large. Surveys now peg the odds at 45%, with some analysts warning of a “voluntary” trade-driven downturn as high as 90%. Historically, recessions hit marginalized communities hardest, exacerbating inequality and undoing years of progress. The Great Recession of 2008-09, for instance, wiped out wealth for countless Black and Hispanic families, with recovery taking years. Advocates for social justice see the current trajectory as a preventable repeat of past mistakes, driven by policies that prioritize ideology over evidence.

The LEI’s warning offers a chance to change course. Policymakers must prioritize stability and equity over divisive trade wars. Rolling back tariffs would ease inflationary pressures, giving families breathing room and businesses predictability. Investing in targeted support—like expanding tax credits for low-income households or boosting job training programs—could shore up the labor market and consumer confidence. These steps, grounded in evidence from past recoveries, would signal a commitment to shared prosperity.

The Federal Reserve, too, has a role. While cautious, it must balance its inflation fight with the need to prevent a deeper slowdown. Modest rate cuts, paired with clear communication, could stabilize markets without reigniting price pressures. History shows that proactive monetary policy, as seen in the 1990s, can sustain growth while keeping inflation in check. For those who champion working families, these are not just economic tools; they’re lifelines for millions.

Ultimately, the economy’s fate rests on choices. Will leaders double down on policies that drive up costs and erode confidence, or will they embrace solutions that uplift the vulnerable and strengthen the nation? The LEI’s decline is a wake-up call. Ignoring it risks a future where opportunity slips further out of reach, and the American Dream becomes a privilege for the few rather than a promise for all.