Newspaper article THE JOURNAL RECORD

Economic Indicators Inch Up in December

Newspaper article THE JOURNAL RECORD

Economic Indicators Inch Up in December

Article excerpt


WASHINGTON (AP) - The government's chief economic forecasting gauge inched up 0.1 percent in December, its first gain in six months, the U.S. Commerce Department said Wednesday.

Many analysts said the report suggested the current recession would be a mild one.

The increase in the Commerce Department's Index of Leading Economic Indicators followed revised drops of 1.1 percent in November and 1.2 percent in October. The November decline was first reported to have been 1.2 percent and October's 1.3 percent, which would have been the worst showing since a 1.4 percent plunge in November 1987.

Even last July's index was improved, making it unchanged from June rather than declining 0.1 percent as first reported. The index fell 1.2 percent in August and 0.8 percent in September.

The index is designed to forecast economic activity six to nine months in advance.

``The index should not be taken as an argument that the economy is in the process of bottoming out,'' said Robert G. Dederick, economist with the Northern Trust Co. in Chicago. But he added ``it is further support for the mild recession scenario.''

Economist Allen Sinai of the Boston Co. said that while the index ``indicates that we're through the worst of the downturn, it does not tell us the bottom is in sight.''

Most economists, including those in the Bush adminstration and on Capitol Hill, have said the recession will be shorter and milder than the average downturn since World War II, ending sometime during the second quarter.

President Bush said in his State of the Union message Tuesday night that while ``the largest peacetime economic expansion in history has been temporarily interrupted ... we will get this recession behind us, and return to growth - soon.''

But many economists are hedging their bets on the outcome of the Persian Gulf crisis.

Six of the 11 forward-looking components propped up the index in December, including higher stock prices, a longer average workweek and orders for new plants and equipment.

Other positive contributors were an improvement in an index measuring consumer confidence, a decline in initial unemployment claims and an increase in unfilled orders at factories.

Negative contributors were fewer factory orders for consumer goods, a decline in building permits, faster business delivery times, a drop in prices of raw materials and a decline in the money supply.

The various changes left the index at 140. …

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