<i>Recession?</i> Well, Not Yet...

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While Wall Street hit "bear market" territory, two other economic indicators on Thursday said the U.S. economy has so far avoided slipping into a recession.

First, the Conference Board reported its Index of Leading Economic Indicators decreased by 0.3 percent to 108.7 last month, after increasing a revised 0.5 percent in January.

While the leading index declined in four of the last five months, it has not declined enough to signal a recession, the New York-based private research group said.

Nonetheless, the Conference Board provided little encouragement that the economy would rebound any time soon.

"The Leading Economic Index suggests that this period of slower growth will probably continue for the next few months," said Ken Goldstein, economist for the Conference Board.

And in a separate report released Thursday, the Labor Department said new claims for state unemployment insurance dipped last week, but still hovered at a level suggesting that employers' demand for workers has eased.

Initial applications for jobless benefits edged down by 1,000 to a seasonally adjusted 379,000 for the workweek ending March 17, the Labor Department's report said.

"Around their current range they (new claims) are consistent with positive, but sluggish job growth," said Merrill Lynch economist Karen Dexter. "However, if they rise above 450,000, payroll employment would likely start declining and the economy could fall into recession."

The week before, claims rose by 5,000 to 380,000, according to revised figures. That marked the highest level since July 4, 1998. The government had previously reported that claims were unchanged.

The more stable four-week moving average of jobless claims, which smoothes out week-to-week fluctuations, climbed last week to 377,000. That was the highest level since April 13, 1996, when claims stood at 388,500.

Economic growth slowed sharply at the end of last year, forcing companies to cut production and jobs because of slumping demand. Manufacturing has been the hardest hit by the slowdown, while housing, construction, and the labor market have generally held up well.

The nation's unemployment rate held steady in February at 4.2 percent even as the economy weakened. The jobless rate climbed from 4 percent in December to 4.2 percent in January.

In the Conference Board report, five of the ten indicators that make up its leading index increased in February: money supply, interest rate spread, vendor performance, and manufacturers' new orders for both capital goods and consumer goods.

The negative contributors to the index were average weekly initial claims for unemployment insrance, index of consumer expectations, average weekly manufacturing hours, stock prices, and building permits.

Three of the four components in the coincident indicators, which measures current economic activity, also increased, helping the Conference Board's index rise 0.1 percent to 116.5.

The index of lagging indicators, which reflects changes that have already occurred, decreased 0.4 percent in February to 107.1.


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  • CBSNews.com staff CBSNews.com staff

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