U.S. Economy Losing Momentum Into 2005, Barometer Shows

By Agence France-Presse A U.S. economic barometer weakened for the fourth straight month in September as oil prices surged, showing a worrying loss of momentum, the New York-based Conference Board said Oct. 21. Its index of leading economic indicators, forecasting activity in the coming months, dipped 0.1 percent from the previous month to 115.6, in line with Wall Street expectations. "A fourth consecutive decline in the leading economic indicators is a clear signal that the economy is losing momentum heading into 2005," Conference Board economist Ken Goldstein said. The U.S. economy was likely to slow in the fourth quarter of 2004 and perhaps the first quarter of 2005 after an estimated expansion of nearly 4% in the third quarter, Goldstein said. "The spike in energy prices and the impact of the hurricanes in September may have held down some economic activity, such as home-building," he said. "If consumers turn cautious -- reacting negatively to the lack of stronger job growth -- then the economy could indeed start slowing, just as the holidays approach." The Conference Board's leading index is compiled from a basket of 10 indicators of future activity. Five of the components deteriorated, led by vendor performance, the gap between 10-year Treasury bond yields and the overnight federal funds rate, weekly jobless claims, hours worked in factories, and orders for consumer goods and materials from manufacturers. Four components improved, led by money supply, share prices, orders for non-military capital goods from factories and permits for new building. Consumer expectations were steady. A separate gauge of current economic activity -- the coincident index -- rose 0.2 percent to 118.0. A measure of past activity -- the lagging index -- was flat at 98.1. In other economic reports, the number of new claims for unemployment benefits tumbled 25,000 to a seasonally adjusted 329,000 in the week to Oct. 16, reversing a gain of 16,000 the week before, the U.S. Labor Department said. A four-week average of new claims, which smoothes out some weekly blips, fell 5,500 to 348,250. Copyright Agence France-Presse, 2004

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