Newspaper article THE JOURNAL RECORD

Indicators Show Sluggish Growth

Newspaper article THE JOURNAL RECORD

Indicators Show Sluggish Growth

Article excerpt

Associated Press

WASHINGTON _ The government's economic forecasting gauge edged a paltry 0.1 percent higher in April, signaling sluggish growth ahead. But a huge increase in new home sales showed the recovery hasn't stalled completely.

The meager increase reported Wednesday in the Commerce Department's Index of Leading Indicators, after a 1 percent plunge in March, surprised economists, who were expecting a 0.3 percent or 0.4 percent gain.

But it was balanced by a separate report showing new home sales surging 22.7 percent in April to a six-year high of 751,000 units at a seasonally adjusted annual rate.

"There are pockets of strength that are barely able to compensate for areas of weakness," said economist Samuel Kahan of Fuji Securities Inc. in Chicago.

He and other analysts expect growth will pick up from the anemic 0.9 percent annual rate of the first three months of the year. But they believe it will fall far short of the robust 4.7 percent rate of the fourth quarter and won't generate much improvement in the nation's jobless rate, which has been stuck at 7 percent since February.

"The unemployment rate will drift slowly, very slowly, downward," Kahan said.

The leading index is designed to predict economic activity six to nine months in advance. Three consecutive monthly movements in one direction, up or down, are considered a sign of whether the economy will be expanding or contracting.

Lately, the index has been in an up and down pattern. It soared 1.7 percent in December, the largest in nearly 10 years. It fell in January and rose in February before taking its steepest tumble in more than two years in March.

Economists said anticipation of higher taxes in both President Clinton's deficit-reduction plan and health care package already is taking the edge off economic activity.

"People are starting to get a sense that a lot of bad things are happening in Washington," said Temple University business school dean William Dunkelberg.

A survey Dunkelberg conducted for the National Federation of Independent Businesses shows a precipitous drop in confidence among small-business executives. …

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