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Strategies & Market Trends : Recession Investing, Business,& Politics, -- Ignore unavailable to you. Want to Upgrade?

To: richardred who wrote (221)	10/22/2006 4:51:00 PM
From: richardred	Read Replies (1) \| Respond to of 247

Recession Warning A Near Miss By Jeanette Boyne, CRN 1:49 PM EDT Fri. Oct. 20, 2006 A recession warning was narrowly avoided yesterday, as The Conference Board's index of leading economic indicators just barely moved in a positive direction following two consecutive months of decline. The leading indicators are measurements of economic activity that are believed to predict economic conditions in the near future. The Conference Board is likely to issue a recession warning after three straight months of decline. The consensus among analysts was that the index would rise by 0.3 percent in September, but the actual released yesterday was merely 0.1 percent. While not negative, the latest index is inconclusive for myriad reasons. According to its handbook, The Conference Board looks at three criteria when deciding whether to issue a recession warning, and all three have barely escaped meeting conditions that merit such a warning: negative readings three months in a row, a decline of one or two points over a six-month period, and declines in more than half of the leading indicators. The index has declined 0.9 percent in the most recent six-month period, and precisely half of the most recent indicators were negative. The indicator that moved the leading index farthest in the positive direction was consumer expectations. Often, an increase in consumer confidence can signal increased consumer spending, but that may not be the case this time. Lynn Franco, Director of The Conference Board Consumer Research Center, stated with the September 26 release of the consumer expectations index, "Even though consumers' concerns have eased, there is little to suggest a significant change in economic activity as we enter the final quarter of 2006." Meanwhile, while jobless claims decreased slightly over the past month as did the average number of hours worked by manufacturing employees. The Conference Board concluded in a statement accompanying the October 19 release of the data that "economic growth should continue at the slow rate [of approximately 2.6 percent real GDP annually] in the near term." This growth rate is markedly slower than the 5.6 percent annualized growth of real GDP realized in the first quarter of 2006. crn.com