A gauge of future US economic activity dropped in February for the fifth consecutive month, suggesting that the weakening US economy could, indeed, be slipping into recession.
The Conference Board said today that its index of leading economic indicators fell 0.3 per cent last month to 135.0 after dipping a revised 0.4 per cent in January.
The February reading was in line with the 0.3 per cent decline expected by analysts surveyed by Thomson Financial/IFR.
The index is designed to forecast where the nation's economy is headed in the next three to six months.
Many economists believe rising gas prices, falling home prices and tightening credit markets have begun squeezing consumers and businesses, forcing them to cut spending. As a result, the US economy may have stopped growing in the current quarter and could continue faltering in the second quarter. That would meet a technical definition of a recession - two consecutive quarters of negative growth.
Ken Goldstein, labor economist at the Conference Board, said in a statement accompanying the report that economic signals "are flashing yellow."
He said the numbers indicate "the economy may be grinding to a halt" and that "a small contraction in economic activity cannot be ruled out."
A further sign of economic deterioration came as the Labor Department reported that the number of newly laid off workers filing for unemployment benefits rose last week to the highest level in nearly two months. But a Federal Reserve reading of business activity in the Philadelphia area was not as bad as analysts had expected.