First increase since April; further weakness expected
By Ruth Mantell, MarketWatch
WASHINGTON (MarketWatch) -- The nation's economy isn't in "free fall," though its recovery may still be a year away and further weakness is expected, a Conference Board economist said Monday.
The index of leading economic indicators rose 0.3% in September, marking the first gain since April, after having dropped a revised 0.9% in August, the Conference Board reported. Economists surveyed by MarketWatch had been looking for a 0.3% gain for last month.
"The extreme volatility in the financial market, and the near freeze-up of credit, will no doubt weaken the economy further," said Ken Goldstein, labor economist at the private research group. "But latest data suggest that conditions in the non-financial economy are not falling apart."
Indeed, six of the 10 indicators that make up the leading index, which is designed to forecast turning points in the economy six to nine months ahead, gained in September. The largest positive contribution came from the real money supply, while the largest negative contribution came from building permits.
From March to September, the leading index fell 1.3%, compared with a decrease of 1.7% in the prior six-month period. However, the Conference Board noted that weakness among the indicators has remained "widespread" in recent months.
The Conference Board's coincident index fell 0.5% in September, while the lagging index dropped 0.2%.
Sales trend
Consumers are deeply concerned about the economy: The most recent reading on sentiment registered a record decline. See full story.
With the holidays approaching, low confidence levels don't bode well for retail spending. Poor sales coupled with ongoing job losses spell persistent troubles for the economy.
In a rare admission from the central bank that monetary policy alone can't fix the economy, Federal Reserve Chairman Ben Bernanke told lawmakers Monday that another shot of fiscal stimulus may be needed now to help the U.S. economy recover.
"With the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate," Bernanke said in an appearance before the House Budget Committee. See full story.
