A key gauge of future US economic growth fell last month at its fastest pace since the September terrorist attacks. The US stock market, still apparently rebounding from last month's savage plunges, seemed to dismiss the report, but it added to concerns in some quarters that the recovery from last year's recession remained at risk.
A senior White House economist said yesterday that the Bush Administration, while confident about future growth, was actively looking into the possibility of a renewed slump, examining a host of economic risks and proposals.
The report from the Conference Board, the New York-based business research group, said its index of leading economic indicators fell 0.4 per cent in July after a 0.2 per cent fall in June.
Six of the 10 forward-looking indicators that make up the index, including measures of building permits and factory work-hours, fell. Last month's decline was led by drops in stock prices and consumer expectations.
The index has been erratic this year. Over the past six months the index has fallen 0.1 per cent, adding to uncertainty over the US economy's direction.
But a recent rally in stock prices and the apparent stabilisation of a key gauge of consumer confidence have mollified fears of a "double-dip" recession. The Dow Jones Industrial Average closed up 213 yesterday at 8,991, the Standard & Poor's Index closed up 22 at 951 and Nasdaq Composite Index finished trading up 34 at 1,395.
While consumer surveys suggest many in the US are more nervous about their jobs, incomes and the overall economy, heavy buying of cars and homes have suggested just the opposite.
Most economists continue to characterise the recent economic slowdown as an interruption, rather than a derailment, of the recovery. Prominent groups such as the Federal Reserve, the National Association of Business Economics (the biggest group of US corporate economists) and the Conference Board continue to forecast a resumption of economic growth.
- (Financial Times Service)
