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To: ild who wrote (111270)	7/5/2001 1:22:40 PM
From: ild	Read Replies (1) \| Respond to of 436258

dailynews.yahoo.com Thursday July 5 10:35 AM ET Chicago Fed Index: Recession Risk Rose WASHINGTON (Reuters) - The recession risk for the U.S. economy increased to its highest point this year in May, according to an index released by the Federal Reserve Bank of Chicago on Thursday. However, the regional Fed bank said that the recent bout of weakness differs from the five downturns since 1967, due partly to the fact that consumer spending is holding in. The Chicago Fed said that its monthly National Activity Index recovered slightly to -1.06 in May from a revised -1.23 in April. The April reading had been -1.09. But the three-month moving average came in at -1.04 from -0.96 in April, which the Chicago Fed said suggests a greater risk of recession -- loosely defined as at least two consecutive quarters of economic contraction. The Fed bank said that in each of the five prior recessions in the period since 1967 over which the index has been constructed, the three-month average had fallen below -1.00, but in each of those instances it breached the -1.50 level. The regional Fed bank noted the current three-month moving average is still above those recessionary levels. It also said that the recent period of substantial economic weakness ``appears to be different'' from those prior periods of contraction. ``In those periods, housing activity and consumer spending on durable goods tended to fall sharply. During the current slowdown, the personal consumption and housing component of the index has remained slightly positive, and this has minimized the decline in the (index),'' the Chicago Fed said. ``Nevertheless, the May (three-month moving average) indicates a greater risk of recession than in any previous month this year,'' it added. May marked the 11th consecutive month that the moving average was below zero, a sign of below-trend national economic growth and a sign of reduced pressure on future inflation. The Chicago Fed index is a reading based on 85 economic indicators that cover areas including production, income, employment, consumption, housing and manufacturing. Overall, 61 of the 85 indicators showed below-average growth in May, the Fed bank said. The remaining 24 components were estimates. A year ago, the monthly index reading was at -0.10 while the three-month moving average was a solid +0.19.