- The Washington Times - Monday, January 26, 2004

Composite economic indexes released Thursday by the Conference Board suggest that the third quarter’s pace of economic growth may have tapered somewhat during the fourth period, setting the stage for solid growth performance through at least the first half of the 2004 presidential election year.

The Conference Board, a leading private business research network, reported that its Leading Economic Indicators advanced 0.2 percent in December. The leading index, which is designed to forecast peaks and troughs in the business cycle, advanced for the ninth consecutive month in December. Throughout most of this period, the gains among the leading index’s 10 component statistics have been widespread.

There have also been generally widespread gains in the board’s related coincident index, which tracks the contemporaneous movement of the U.S. economy and includes measurements for production, sales, income and employment. The first three coincident indicators have been increasing during the past two quarters, while the employment indicator has been essentially flat in recent months.

Based on the upturn in the leading index during the third and fourth quarters, the Conference Board projected, “real [i.e., inflation-adjusted] GDP growth jumped to at least a 6 percent average annual rate in the second half of 2003.” The annualized growth rate for the fourth quarter, whose first estimate will be published on Friday by the Commerce Department, could be less than half the third quarter’s 8.2 percent annual rate and still meet the six-month average rate of 6 percent. Even if fourth-quarter growth should recede to that level, however, the Conference Board reported that “[t]he continued growth in the leading index in recent months is signaling that strong economic growth (in the 5.0-6.0 percent range) should persist in the near term.”

In retrospect, the significant deceleration of the economy’s growth rate during 2000, coupled with the initial effects of the deflating stock-market bubble, undoubtedly contributed to the Democrats’ failure to retain the White House. Indeed, recent revisions of GDP reveal that the economy actually contracted during the third quarter of 2000.

The private economy went on to shed more than 2 million jobs. Perplexing many economists and providing great concern to the Bush White House, the economy has jettisoned another 900,000 jobs in the private sector during the 25 months since the recession officially ended.

The fact remains that there are still 3 million fewer private-sector jobs than there were three years ago. At some point, the economy’s accelerating growth rate needs to begin generating comparable job growth, or a 5 to 6 percent growth rate may not be sufficiently impressive to voters.

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