US Index Posts Biggest Confidence Drop Since September

21 August 2002

The latest monthly index of leading indicators from the New York-based Conference Board suggests that corporate scandals and stock market turmoil are continuing to undermine prospects for a US economic recovery.

A gauge of expected economic conditions three to six months ahead, the index sagged 0.4% in July, the largest drop since September. The Conference Board also revised its estimate of June’s reading from flat to –0.2%.

“The second consecutive decline in the leading indicators index raises fears about the current recovery,” declared the Board’s chief economist Ken Goldstein. “Volatile financial markets, corporate scandals and sagging consumer expectations are trouble spots.”

Of the index’s ten components, six fell last month, while four rose. Continued Goldstein: “Latest evidence shows no significant weakening in the consumer markets, with home and car buying continuing to be strong.”

Meanwhile, two other economic barometers from the Conference Board both rose in July. The coincident index, measuring current economic trends, edged up 0.1%, while the lagging index, which gauges past trends, increased by the same margin.

Data sourced from: USA Today; additional content by WARC staff