Source : The Business Times, December 21, 2007
Conference Board's gauge falls for third time in 4 months
(WASHINGTON) The index of leading economic indicators fell for the third time in four months in November, signalling an increasing risk of a US recession.
The Conference Board's gauge, which points to the direction of the economy over the next three to six months, fell a greater- than-forecast 0.4 per cent after declining 0.5 in October, the New York-based research group said yesterday.
The report followed revised figures from the Commerce Department that confirmed growth accelerated in the third quarter.
Gross domestic product (GDP) grew at a 4.9 per cent pace in the July-to-September quarter, unchanged from an estimate made a month ago. This impressive performance, the best in four years, was swarmed by bad news on other fronts. Builders slashed spending on housing projects in the third quarter at an annuallised rate of 20.5 per cent, the most in 16 years.
The economy's growth from October to December is expected to have slowed to a pace of just 1.5 per cent or less.
GDP measures the value of all goods and services produced within the US.
The deepest housing slump in 16 years is likely to worsen as foreclosures mount and banks restrict lending, economists said. Declining property values and rising energy costs may also hurt consumer spending, which accounts for more than two-thirds of the economy.
'It's certainly pointing to a slowdown,' said Roger Kubarych, chief US economist at Unicredit Global Research in New York and a former Federal Reserve researcher. 'The fourth quarter is going to be much weaker.'
Economists forecast that the Conference Board's index would decline 0.3 per cent, according to the median of 60 estimates in a Bloomberg News survey. Projections ranged from a decline of 0.6 per cent to a gain of 0.2 per cent.
The National Retail Federation in Washington has forecast that holiday sales this year will show the smallest gain since 2002.
The leading index is down at an annual pace of 2.3 per cent over the last six months, short of the approximate 4 per cent to 4.5 per cent drop that Conference Board economists say signals recession.
Former Treasury secretary Lawrence Summers said on Wednesday that it is 'quite likely' that a contraction will develop next year, while former Federal Reserve chairman Allan Greenspan has given it about even odds. -- Bloomberg, AP
No comments:
Post a Comment