U.S Economy Headed Toward Recovery, Says Group
January 22, 2002
The U.S. economy may be closer to seeing the end of the recession.
On Tuesday morning The Conference Board reported its index of Leading Economic Indicators in December posted its biggest gain since February 1996 to 111.4.
This future gauge of economic activity increased 1.2% following a revised rise of 0.8% in November and 0.1% in October, beating analysts' expectations of a 0.7% increase.
The private New York-based group reports three increases in their index generally indicates that the economy will expand in the next three to six months. They also reported the November-December gains were the largest for two consecutive months since November-December 1992 following the 1990-91 recession.
"The strong signal from the indicators means that the recession could be over soon," said the board's economist, Ken Goldstein. “Three successive monthly increases, each larger than the one before, bring the level of the leading series above the pre-recession peak."
He attributed the latest rises to Federal Reserve cuts in short-term interest rates and strong growth in the nation's money supply, but also credited falling energy prices and steep retail discounting of prices with having a major positive effect.
Eight of the 10 indicators that make up the leading index increased in December. The positive contributors to the leading index - from the largest positive contributor to the smallest - were average weekly initial claims for unemployment insurance, interest rate spread, money supply, average weekly manufacturing hours, index of consumer expectations, building permits, stock prices, and vendor performance.
The two negative contributors to the index, beginning with the largest negative contributor, were manufacturers' new orders for non-defense capital goods and manufacturers' new orders for consumer goods and materials.