Quoted – Leading indicators drop, experts still expect “sluggish” economic growth

2004 - United States - Manhattan - New York Ci...
Image by Colin Gregory Palmer via Flickr

The Conference Board reported Thursday the Leading Economic Index fell 0.1 percent in April, the first drop in a year, after a 1.3 percent gain in March and a 0.4 rise in February.  Nevertheless, economists still expect slow but steady economic growth in the months to come.

April’s dip is a sharp contrast with the year-earlier month, when the index rose 1 percent following consecutive decreases in the previous six months.

The Conference Board is a business-supported research organization. Its Leading Economic Index, composed of 10 economic indicators, is designed to predict economic activity. Typically, three consecutive LEI changes in the same direction usually reflect a turning point in the economy.

“I think we’re starting to make some headway,” said Scott Testa, an economics professor at Cabrini College in Philadelphia. “It’s going to be a steady slow climb. We’re not going to see anything dramatic, however, until fall, or maybe until 2011.”

The most influential lagging indicator is the unemployment rate, Testa said, which is “probably what the Fed looks at most for the inflation rate.” He continued, “When the Fed sees momentum, it’s going to start looking at raising interest rates again.”

Testa has a hunch that consumers will see inflation occur in oil and energy. “Energy has been kept in check two to three months, but the summer driving season combined with the Gulf situation is going to cause a small blip in prices and have long term affects on the price of food.”
http://news.medill.northwestern.edu/chicago/news.aspx?id=164935

Reblog this post [with Zemanta]
Advertisements

Quoted – Consumer confidence index reaches high, signaling economic recovery

Consumer confidence has reached its highest level since September 2008, another sign that the economic recovery is underway.

The Conference Board Inc.’s Consumer Confidence Index rose  5.6 points in April to 57.9 from 52.3 in March. The survey uses 1985 as a base year of 100.

It’s good news for everyone from homebuilders to store owners because higher confidence should result in more sales and consumer spending accounts for about 70 percent of gross domestic product.

The persons polled who said business conditions are “good” rose to 9.1 percent from 8.5 percent a month  earlier, while those who said business conditions are “bad” declined only slightly to 40.2 percent from 42.1 percent.

The economy has been helped by tax relief legislation, said Scott Testa, an economics professor of Cabrini College in Philadelphia. “This is the first time home-buyers assistance from the federal government has driven the economy.”

Psychologically, people feel the economy is at the tail end of this recession, Testa said. “We’ve seen other numbers in check such as inflation and the sentiment is certainly more positive than it was a year and a half ago. People are less afraid of losing their jobs,” he said.

Consumers’ outlook improved from March. Those anticipating improved business conditions over the next six months increased to 19.8 percent from 18.0 percent.

The rising Consumer Confidence Index runs counter to a preliminary report on consumer sentiment released by the University of Michigan, based on a survey conducted in  mid-April, showing that sentiment declined from March to April.

While the two surveys ask similar questions, the sentiment survey is conducted via phone, while the confidence survey is conducted with written questionnaires given to more people. The full consumer sentiment report will be released Friday.

“There may not be a very statistically significant difference between last month and this month, there’s a lot of noise from month to month,” Barsky said.

The survey also suggests that while consumers are more optimistic about the job outlook, the proportion of consumers expecting an increase in incomes declined to 10.3 from 10.8 percent.

“I don’t know anyone who has received a pay increase,” Compall said.

People are still nervous, Testa said. “The big lagging indicator in any economy is usually the unemployment rate and it still hasn’t moved that much. Those indicators make people generally hesitant in some ways.”

Reblog this post [with Zemanta]