Tags: Leading | Economic | Index | Growth

Leading Economic Index Signals Modest US Growth

Thursday, 18 Aug 2011 12:08 PM

A private research group forecast that the economy will grow slowly in the second half of the year because of the support it's gotten from the Federal Reserve.

The Conference Board said its index of leading economic indicators rose 0.5 percent in July. The index had risen 0.3 percent in June.

This summer's readings suggest that the economy won't pick up enough this year for the jobless rate to drop much. The small moves higher however indicate that the country likely won't fall back into recession, as some economists fear.

"The economy is slow, with little momentum, and shows no indication of acceleration," said Conference Board economist Ken Goldstein. He added that despite "growing risks," the economy would likely grow at a "modest pace" this fall and winter.

Prominent economists have been cutting their growth forecasts for the second half. Moody's Analytics on Monday said it expects real gross domestic product to grow at an annualized rate near 2 percent in the second half of this year. It had earlier predicted growth of 3.5 percent.

In the first half of 2011, the economy grew at the slowest pace since the recession officially ended in June 2009 -- 0.4 percent in the first three months and 1.3 percent in the April-June quarter. The slump sparked fears that the U.S. could "double-dip" back into a downturn.

The slow upward march in the leading indicators' index has so far suggested that won't happen. But jobs are likely to remain scarce. Mark Zandi, Moody's chief economist, said the economy must grow 2.5 percent to 3 percent a year to add jobs fast enough to keep the unemployment rate stable. It currently stands at 9.1 percent.

Six of the 10 measures in the Conference Board's index show improvement -- primarily its measures of the financial sector. They have been helped by the Fed's record-low interest rate policy. Three of the Board's measures dropped, one held steady.

The Conference Board is a private research group based in New York. Most of the data it uses in calculating the leading indicator index -- about real estate, manufacturing, employment, consumer confidence and financial markets -- has previously been released. The Conference Board also includes its own estimates about manufacturers' new orders and the country's money supply.

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A private research group forecast that the economy will grow slowly in the second half of the year because of the support it's gotten from the Federal Reserve. The Conference Board said its index of leading economic indicators rose 0.5 percent in July. The index had risen...
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2011-08-18
 

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