Leading Index Decline Not Seen Signaling Recession

By John S. McClenahen As expected, the Conference Board's index of leading U.S. economic indicators fell for the fifth consecutive month in October, a development that by one historical rule-of-thumb could signal recession. October's decline was 0.3%. "However, the recent declines in the leading index have not been large enough nor have they persisted for long enough to signal an end to the current economic expansion," stressed the New York-based business research group in a report released on Nov. 18. Its leading index now stands at 115.1 (1996=100). "While the leading index is not yet signaling a downturn in the economy, the growth rate of the leading index as slowed below its long-term trend growth rate," said the Conference Board. "This is consistent with real GDP continuing to grow in the near term, but more slowly than its long-term trend rate." Economists generally figure the non-inflationary long-term growth rate of the U.S. economy is about 3.5%.

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