More Than A 'Soft Patch'?

Could the U.S. economy, again apparently in a "soft patch," could be headed for a slow slide toward recession?

Most economists are not thinking or mentioning the "R" word. But there is reason for pause. The Conference Board's index of leading economic indicators for the U.S., a measure that previews economic activity for the next three to six months, fell four-tenths of a percentage point in March. Falling a tenth of a percent more than expected, the index now stands at 115.1 (1996=100). In February of this year, the index rose a tenth of a percent, and in January it fell three-tenths.

Just two of the ten indicators that comprise the index were positive in March. They were manufacturers' new orders for consumer goods and materials, and the interest rate spread. The other eight -- including average weekly manufacturing hours and manufacturers' new orders for non-defense capital goods -- were negative.

With more weakness than strength among the indicators, the leading index has been just about flat for the past five months. "The recent flatness of the leading index, compared to its long-term trend of 1.5% growth, is consistent with the [U.S.] economy continuing to expand in the near term, but more slowly than its long-term average rate," says the Conference Board, a New York-based business research group.

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