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

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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.”

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Quoted – Confidence rises, inventories return to normal, but retail sales fall – Medill Reports

Quoted – Confidence rises, inventories return to normal, but retail sales fall – Medill Reports

Consumer confidence rose, inventories returned to normal, but retail sales fell, according to various reports released Thursday.

Despite the importance of retail sales figures in measuring recovery from the recession, the modest seasonally-adjusted drop of 0.3 percent in December won’t necessarily have a negative effect on the public’s perception of the economy, said economics professor Scott Testa of Cabrini College in Philadelphia. “One or two reports will not have a marked effect on people’s perception. Consumers are seeing a series of positive signals and because they make up 70 percent of the economy, consumer confidence is invariably good for all of us.”


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