The Conference Board's leading indicators no longer signal recession.The U.S. recession fears were partly responsible for the early August slide in stocks and cryptocurrencies.The leading U.S. economic indicators are still pointing to a slowdown, but no longer signal a recession, data from the Conference Board, a nonpartisan and non-profit research organization, showed Tuesday. That's a positive sign for risk assets, including cryptocurrencies.

The organization's Leading Economic Indicators (LEI) declined 0.6% in July to 100.4 following June's 0.2% drop. The measure peaked in the second quarter of 2022 and has been falling ever since, according to data source MacroMicro.

The LEI comprises several forward-looking indicators such as average weekly hours in manufacturing, average weekly initial claims for jobless insurance, ISM new orders index, stock prices and leading credit index. It helps identify shifts in economic trends and turning points in financial markets and is considered one of the most reliable signals of a recession – defined as consecutive quarterly contractions in the growth rate.

The continued decline in the LEI indicates impending headwinds for the economy. However, the annualized six-month change narrowed to -2.1% in July from -3.1% in June, a sign the risk of recession is lessening.

“The LEI continues to fall on a month-over-month basis, but the six-month annual growth rate no longer signals recession ahead,” Justyna Zabinska-La Monica, senior manager of business cycle indicators at the board, said in a statement.

The latest reading is likely reassuring to risk asset bulls. Perhaps the pain trade in stocks and cryptocurrencies is now on the higher side, given the backdrop of the recent market slide and the resulting dour sentiment.

Recession fears gripped the market early this month after U.S. nonfarm payrolls data revealed a sharp slowdown in job creation in July. The Treasury yield curve witnessed bull steepening to signal recession alongside a similar warning by the so-called Sahm's Rule. The mass unwinding of yen carry trades added fuel to the fire.

As a result, stocks dropped hard and bitcoin tumbled to $50,000 from $70,000. Since then, the leading cryptocurrency has climbed back to over $60,000, CoinDesk data show.

The chart shows that while the Conference Board's leading index is trending south, the coincident indicators, which indicate the economy's current state, are rising along with the lagging indicators. It's a classic sign of an economy in a late-stage expansion phase.