The Economy: Leading Indicators Fell 0. 4% Amid Gloom in July
Is the economy slipping back into recession? The most forward-looking economic indicators hint it could be heading in that direction, though not convincingly.</br></br>The Conference Board, a New York nonprofit business research organization, reported its monthly index of leading economic indicators fell 0.4% in July, its third decline in four months and its largest decline since September, when terrorist attacks in New York, Washington and Pennsylvania sent stock prices and consumer confidence tumbling. Falling stock prices were a culprit for the July decline as well, accounting for 0.3 percentage point of the overall drop.</br></br>Of the 10 leading indicators tracked by the conference board, four were pointing up in the month -- the growth in money supply, manufacturers' orders for capital goods outside of the defense sector, orders for consumer goods, and weekly claims for state unemployment insurance benefits. Some of the down indicators, such as the stock market, have shown signs of firming in August. The S&P 500 index, for example, was up by 2% in the month through Friday.</br></br>The latest monthly decline comes after several weeks of negative economic news had already increased concerns that corporate accounting scandals and the weak stock market had led to a sharp slowdown in economic activity. Several other leading indicators are also pointing down. The Economic Cycle Research Institute, another private research organization, said its weekly index of leading indicators is down 3.2% from late May. Meanwhile, the Organization for Economic Cooperation and Development said its monthly index of leading indictors among industrialized economies in North America, Asia and Europe turned down in June after rising for seven straight months.</br></br>Leading indicators offer an imperfect glimpse at the outlook for future economic activity. They range from consumer expectations to manufacturers' orders for capital goods to permits granted for future home construction.