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US Economy in Danger of Stalling, Report Says - 2002-09-23

New reports released Monday by the Conference Board, an independent research group, indicate that the current economic recovery in the United States is in danger of stalling.

The Conference Board says its leading index gauging the direction of the U.S. economy declined for the third month in a row in August.

Rising claims of unemployment insurance, weaker consumer spending, a drop in building permits and new orders for the manufacture of non-defense related products, contributed to the 0.2 percent drop.

In spite of the decline, Conference Board economist Ken Goldstein says the good news is that the economy has continued to recover for the past eight months.

"The problem with the good news is it is not a very strong recovery, number one, and number two, even the modest recovery that we have been experiencing since the beginning of the year has some danger," he said. "I do not want to over emphasize but at least there is some reason to expect that even this weak recovery could lose some momentum over the next three to six months."

Mr. Goldstein says another indicator, the so-called coincident index that reads the current pulse of the economy, confirms that the recovery is indeed real. But, taken together, he says, the two indicators show a slowdown.

"So this kind of good news bad news kind of swing from day to day is precisely what you get in an economy that is growing so slowly and there is a kind of sense from here that looking at the coincident and the leading economic index that at a minimum we will be in this slow growth mode for at least another couple of months," he said.

Mr. Goldstein says despite the danger of a slowdown, new layoffs and the September 11 attacks, there is no indication that the U.S. economy is heading towards a recession.