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Leading index falls 0.1%, recession not imminent

February 21 2008

The Conference Board reported today the U.S. leading index of economic indicators fell 0.1% in January to 135.8. Based on revised data, the index decreased 0.1% in December and 0.4% in November.

However, The Conference Board said Wednesday that a recession was not imminent.

"While the correction in the financial sector is just beginning, the correction in the housing sector is nearly over," said Gail Fosler, president and chief economist of The Conference Board.

Although the economy has weakened, business activity and corporate profits continue to rise, according to the organization. Consumer spending is also increasing.

"Exports are booming and imports and import penetration are down," Fosler said. "While there is continuing uncertainty about the economic outlook, economic shocks from the contracting financial sector are not enough to tip the U.S. economy into recession."

For January's leading index, four of the 10 leading indicators that make up the leading index increased. They were: real money supply, average weekly initial claims for unemployment insurance (inverted), index of consumer expectations, and vendor performance. Indicators that declined included stock prices, building permits, manufacturers' new orders for nondefense capital goods, and interest rate spread. Indicators holding steady in January included average weekly manufacturing hours and manufacturers' new orders for consumer goods and materials.

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