Economy Is Weak, But No Recession, Indicators Show
The U.S. economy is weak but does not appear to be in a recession, according to a key forecasting gauge that rose for the second straight month in April, the Conference Board reported on Monday.
The private Conference Board said its Leading Economic Indicators index rose 0.1 percent after a matching increase in March, which was unrevised. That was after declining for five months in a row.
"These data certainly reflect a weak economy, but not one in recession," Ken Goldstein, a labor economist at the group, said in a statement.
"Moreover, the small increases in the Leading Index in both March and again in April could be a signal that the economy may not weaken further." Between October 2007 and Feb 2008, it was down five times in a row and economists said the two-month turnaround was a signal that a U.S. recession would be short-lived.
"So far it seems as if the recession will be short and shallow," said Harm Bankdholz, economist with Unicredit Markets and Investment Banking in New York.
The Coincident Index, a measure of current conditions, was unchanged in April and March, while the Lagging Index rose 0.1 percent in April and 0.4 percent in March.
The Conference Board's latest reading adds to growing sentiment on Wall Street that credit conditions may actually be improving.
But it was a stark contrast to a closely watched forecast of economists released on Monday, which predicted the economy was already in or headed this year into recession.
The latest survey by the National Association of Business Economists showed credit markets will show some improvement this year.
Still, it said the outlook for growth is weak for this year and next, with more than half of those 52 economists surveyed believing a recession has already begun or will develop this year.
"While our panel anticipates an improvement in credit markets and a bottoming out in housing this year, the forecasters have marked down their estimates of growth for both 2008 and 2009," said Ellen Hughes-Cromwick, NABE president and chief economist at Ford Motor.
A White House spokesman agreed the economy is not growing quickly enough but said tax rebates and other incentives meant to spur economic growth will help.
"We know that not enough jobs are being created and the economy is not expanding at a rate -- although it is expanding, we had 0.6 percent growth in the first quarter of this year," said White House Spokesman Scott Stanzel.
"But the president is not satisfied with that so he's focused on the policies that will help us have greater, expanded growth and job creation in the second half of the year."