US leading index tumbles for fifth straight month

Mar 20, 2008, 19:13 GMT

Washington - A forecast of US economic growth dropped for the fifth straight month in February amid eroding consumer confidence and higher jobless claims, according to a private survey released Thursday.

The US leading index fell by 0.3 per cent and six of the 10 economic indicators that form the index were down on the month, the New York-based Conference Board said.

The index last fell five months in a row was early 2001, the last time the US economy was in a recession. It has now fallen 1.5 per cent since August and only two of its 10 indicators have risen in that period.

Economic growth in the United States stalled to an annualized 0.6 per cent in the fourth quarter of 2007 and many economists believe the world's largest economy has since entered a recession.

'It looks like we are in a recession,' Bruce Kasman, chief economist at JPMorgan Chase told Bloomberg Television. 'The economy was probably stagnant in the first quarter and it looks like things got worse at the end of the quarter.'

The Conference Board, which forecasts growth trends for the next three to six months, said the index suggested that 'increasing risks for economic weakness are likely to continue in the near term.'

Rising jobless claims, along with lower consumer confidence, building permits and stock prices were the major causes for the February drop in the index.

The Labor Department reported Thursday that first-time unemployment insurance claims rose by 22,000 last week, while the number of people claiming benefits climbed to the highest level since August 2004, according to Bloomberg.

A rise in indicators based on interest rate spreads - given the Federal Reserve's drastic cuts in its key interest rate by a cumulative 2 percentage points since January - and real money supply was not enough to halt the February slide, the survey said.