U.S. Leading Indicators Suggest Only Moderate Recovery

By John S. McClenahen Falling stock prices and a shrinking money supply last month helped push the Conference Board's index of leading economic indicators into decline for the first time since September 2001. Down 0.4%, the index now stands at 111.7 (1996=100). Economists generally had expected a 0.2% decline. However, modest April gains in the index of coincident economic indicators indicate a slowly recuperating U.S. economy, stresses the Conference Board, a New York-based business research group. Its coincident index advanced 0.2% to 116.0 (1996=100) in April. Five of the 10 indicators that constitute the leading index fell in April. In addition to stock prices and money supply, they were consumer expectations, initial claims for unemployment insurance, and the interest-rate spread. In contrast, all four indicators, including industrial production, that make up the index of coincident indicators were up in April. "A preliminary forecast suggests a moderate rebound [for] May as stock prices [have] jumped and jobless claims [have] drifted lower," says Stan Shipley, a senior economist at Merrill Lynch & Co., New York.

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