- The Washington Times - Monday, May 19, 2003

NEW YORK (AP) — The economy looks set to continue at its sluggish pace for the next three to six months, according to a widely watched index.

The Conference Board, a New York-based research group, yesterday said its Index of Leading Economic Indicators rose by 0.1 point last month to 110.6.

It was the first increase in three months, but it gave little sign of any brisk recovery after the war against Iraq. The economy has been in a “soft spot” for more than half a year, with employment particularly weak.

Economist Carol Stone at Nomura Securities International in New York noted that the April reading was lifted mostly by the rise of the stock market and consumer expectations, while harder data on jobs and manufacturing held it down.

“We still have a ways to go. The best we can get out of this is that it stopped falling,” she said.

The index fell 0.2 point in March and 0.5 point in February.

Conference Board economist Ken Goldstein said the index suggested that the nation’s gross domestic product would increase at an annual rate of 1.5 percent in the second quarter, about the same as the last two quarters.

“While the economy is growing and not losing momentum, growth is very slow and will be that way for at least a few more months,” Mr. Goldstein said.

The slight rise in the index matched analyst expectations.

Gary Thayer, chief economist at A.G. Edwards & Sons Inc. in St. Louis, said the index reading was mostly a reflection of how the economy did during the war against Iraq.

“There really hasn’t been enough time after the war to get a clean indicator,” Mr. Thayer said.

He noted that interest rates were still low, a tax cut was coming and a declining dollar was boosting American exports.

“We got a lot of good things happening, it’s just going to take time for it to happen,” he said.

He likened fears about the slow economy to the “doubt phase” of the first week of the war, when “everybody thought it would drag on forever.”

Still, the Federal Reserve’s rate-setting committee hinted two weeks ago that it might reduce interest rates at its next meeting on June 24-25 to further stimulate business.

The Conference Board’s coincident index, which measures current economic performance, declined 0.1 point in April to 114.9 on lower industrial production and fewer people in nonagricultural jobs. The index had held steady in March.

The indexes stood at 100 in 1996, their base year.

Last week’s batch of reports supported the picture of an economy that wasn’t firing on all cylinders. Consumer confidence rebounded in May, according to a survey by the University of Michigan.

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