Leading US economic indicators drop

The Sydney Morning Herald ^ | August 20, 2004 | AP

[Willie Green]

For education and discussion only. Not for commercial use.

A closely watched measure of future economic activity fell in July for the second consecutive month, reinforcing evidence that the U.S. financial recovery is slackening.

The Conference Board said Thursday its Composite Index of Leading Economic Indicators dropped by 0.3 per cent in July to 116.0, following a revised decline of 0.1 per cent in June. Last month was the first time in more than a year that the index had lost ground.

"The latest decline in the Leading Index reflects a loss of forward momentum," said Ken Goldstein, economist for the Conference Board. "There are growing concerns about the high cost of gasoline and milk, as well as worries about where economic growth will come from now that tax refunds have been spent and short-term interest rates are rising."

The index is closely followed because it is designed to forecast the economy's health over the coming three to six months.

Also Thursday, the Labor Department reported that the number of Americans filing new claims for unemployment insurance dipped by 3,000 to 331,000 last week. That marked the third consecutive week of decline in claims. The four-week moving average of claims, which smoothes out fluctuations in the often volatile figures, fell to 337,000 from 339,500 in the previous week.

Stocks were lower following release of the reports. In the first hour of trading, the Dow Jones industrial average was down 23.89 to 10,059.26. The Nasdaq composite index was down 5.81 to 1,825.56. The Standard & Poor's 500 index was down 2.58 at 1,092.59.

The New York-based Conference Board said six of the 10 indicators that make up the index declined in July. They included vendor performance, the interest rate spread, stock prices, average weekly initial claims for unemployment insurance, real money supply and manufacturers' new orders for nondefense capital goods.

The components that rose were building permits, the index of consumer expectations, average weekly manufacturing hours and manufacturers' new orders for consumer goods and materials.

The index of coincident indicators, which measures the current economy, rose 0.1 per cent in July to 117.5, with all four of its components also rising, after remaining steady in June.

The index of lagging indicators, which looks back at the past six months, rose 0.5 per cent in July to 98.3, after coming in flat in June.

[familyofman]

"The index is closely followed because it is designed to forecast the economy's health over the coming three to six months."

Don't worry - be happy, nothing going on in next 3 - 6 months.

[marlon]

WOW, it was just yesterday or the day before that all, and I mean all of the major US papers were touting how the economic indicators were all up in the month of July. Guess these Aussie socialists now more about our economy than we do! Bawwwaaaawwaaaaa

[Texas_Dawg]

You and your man Kerry are going to lose, Willie. Hate to break it to you.

[mywholebodyisaweapon]

I think it was Paul Samuelson who said something to the effect that the index of leading economic indicators has predicted five of the last two recessions.

[coconutt2000]

what are the other 6 indicators?

Are they possibly indicators that are affected by a highly speculated commodities market?

[maestro]

what are the other 6 indicators? Are they possibly indicators that are affected by a highly speculated commodities market?

For sure,.....they have NOTHING to do with international oil refineries scams and the price of gas.

:-)

[expat_panama]

"second consecutive month, reinforcing evidence that the U.S. financial recovery is slackening."

If this is why they call GW a "miserable then please give me Terayzah's "four more years of hell". BTW, the leading indicators are: Average workweek (manufacturing) Initial unemployment claims New orders for consumer goods Vendor performance Plant and equipment orders Building permits Change in unfilled durable orders Sensitive material prices Stock prices (S&P 500) Real M2 – money supply Index of consumer expectations

[coconutt2000]

Thanks, I'll take a look at it.

[LowCountryJoe]

I just finished up reading a book by Russell Roberts titled The Choice, which is a short (110 page) fable that touts the virtues of trade, comparative advantage, growth, innovation, and standard of living increases. Russell breaks things down into an easily understood lesson through a decent little story. Although it might be a pretty challenging read for someone like you, Willie.

I know this is off topic on your thread, Willie but I find your pro-government leanings rather off topic in the FR.

[remember]

WOW, it was just yesterday or the day before that all, and I mean all of the major US papers were touting how the economic indicators were all up in the month of July. Guess these Aussie socialists now more about our economy than we do! Bawwwaaaawwaaaaa

The Aussie newspaper was just repeating a story carried by various U.S. sources, including the AP at this link. The Conference Board, which generates the index of economic indicators, is a not-for-profit organization and holds 501 (c) (3) tax-exempt status in the United States. Still, it is a little strange that so many U.S. papers were touting the economic indicators yesterday when the index was scheduled to come out today. I would suspect that most of the indicators were already available, including those which dropped. Perhaps it was just a slow news day.