Index of leading economic indicators down in March; in line with analysts' predictions

Monday, April 21st 2003, 12:00 am
By: News On 6

NEW YORK (AP) _ A key indicator of where economic activity in the United States is heading fell in March for a second straight month.

The New York-based Conference Board said its Index of Leading Economic Indicators fell by 0.2 percent last month to 110.6, pushed down by worries over higher oil prices, the war and potential terrorist attacks. The result was in line with analysts' expectations.

But the Conference Board said the bigger threat to economic stimulation comes from consumers' lower expectations, raising ``the specter of a falloff in consumption growth.''

``This is significant because without much investment or export growth, only consumption has been fueling the economy,'' said Conference Board economist Ken Goldstein.

Although the index was down two months in a row, the Conference Board said the information available so far in April suggests that the declines will not continue. The index had fallen a revised 0.5 percent in February after a 0.1 percent rise in January.

The Index of Leading Economic Indicators measures where the overall U.S. economy is headed in the next three to six months. It stood at 100 in 1996, its base year.

Consumers' spending has been the fuel for the struggling economy, but according to the Conference Board, their desire to spend appears to be tapering off.

``The combination of the slowing in consumption growth and the delayed start to more investment has effectively extended the soft spot that the economy has been in,'' Goldstein said.

He added that the ebbing of the fighting in Iraq has not boosted business capital investments or consumer spending, as some had predicted or wished.

He noted that at the end of the Gulf War a decade ago, ``the end of fighting didn't deliver much impetus to the domestic economy. As was the case then, an end to the fighting may do little to change trends in the U.S. economy.''

The board's coincident index, which measures current economic activity, held steady at 115.3 in March after falling 0.2 percent in February. The Conference Board said this index is unlikely to grow strongly, since the economy is not really going anywhere. During the six-month period through March, the coincident index increased only 0.1 percent.

The lagging index, which show economic changes that have already occurred, fell 0.1 percent to 99.2 last month.