- The Washington Times - Tuesday, May 20, 2008

NEW YORK (AP) — Gas prices are high, food is more expensive and the job market is cold, but the U.S. might still avoid a recession.

That was the message yesterday from a private business group whose index of leading economic indicators defied expectations and inched higher in April.

The New York-based Conference Board said its forecast of future economic activity rose 0.1 percent last month, matching a 0.1 percent increase in March. Economists had expected a 0.1 decrease last month.

The index is designed to forecast economic activity in the next three to six months based on 10 economic components, including stock prices, building permits and initial claims for unemployment benefits.

“These data certainly reflect a weak economy, but not one in recession,” said Ken Goldstein, labor economist at the Conference Board.

The small increases in March and April, which followed five months of decline, could be a signal the economy may not weaken further, he said.

Six of ten leading indicators the Conference Board measures rose last month, including stock prices, interest rate spreads and housing permits. Those increases more than offset the sharp declines in average weekly hours worked and consumer spending.

The six-month rate of decline for April, which economists look to as a predictor of recessions, was negative 1.2 percent, which points to sluggish growth at best, said economist Dana Saporta of German investment bank Dresdner Kleinwort.

It remains to be seen whether the economy’s deceleration resumes after “a temporary pop from tax rebates,” Mr. Saporta said.

More than half the members of the National Association for Business Economics say the economy has started or will enter a recession this year, according to a survey released yesterday. Now, 56 percent of the economists think the economy has started or will enter a recession this year, up from 45 percent in a survey in February.

They forecast 1.4 percent growth for the year, which would be the weakest growth since the 2001 recession.

The rising cost of food and fuel, and the inflation that could spark, could prompt the Federal Reserve to maintain interest rates at current levels when its policy-setting committee meets June 25. The Fed last lowered rates in April, to 2 percent, but it signaled the campaign that reduced rates seven times from 4.75 percent could be ending.