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Solid Future For Economic Growth

A key forecasting gauge rose a solid 0.3 percent in January to yet another record high, signaling that the nation's record economic expansion will continue well into the year.

The Conference Board said that its Index of Leading Economic Indicators increased to 106.4 percent in January. The 0.3 percent rise matched the increases of the previous two months and was in line with Wall Street analysts' expectations.

The strong performance of the index during the last three months suggests that the economy maintained significant momentum in the first month of 2000, said Ken Goldstein, the economist of the business-financed research group.

But he added that "the biggest risk to the ongoing expansion is the prospect of more interest rate hikes, as the Federal Reserve Board tries to engineer moderation in this quite strong growth pattern."

Fed policy-makers, who have raised interest rates four times since June, are widely expected to increase rates again at a meeting March 21 in an attempt to cool off the nation's roaring growth and hedge against inflation.

Goldstein noted that there was one worrying trend beginning to show up in the index a weakness in new orders for manufacturers of consumer products.

"If there is one trouble spot on the landscape, it is that orders fell in both September and October, then recovered in November and December, but declined again in January," he said.

The index is a barometer of economic activity in the next three to six months.

Most analysts believe that the U.S. economy is growing at a rate of between 4 percent and 5 percent in the current quarter, down some from the torrid 6.9 percent pace in last year's fourth quarter but still well above the average.

The economic expansion, currently in its 108th month, is the longest in the nation's history, having surpassed the 106-month expansion of the 1960s in February.

The Conference Board said that seven of the 10 components of the index of leading indicators rose in January.

The index of coincident indicators, which measure current expansion, went up 0.4 percent in January to 114.2. The lagging index dropped 0.2 percent in January to 103.4 but did not signal economic imbalances, the board said.

By Eileen Alt Powell