Has GDP Growth Disappeared? Leading Economic Indicator Stalls

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High unemployment, lack of credit availability for small businesses and consumers, and slow wage growth may have caught up to an American economy which has been on the mend since late 2009.

The Conference Board Leading Economic Index for the U.S. declined .1% in April, following a 1.3% gain in March, and a .4% percent rise in February. It is another sign that the recovery may not be sustainable of joblessness does not improve quickly and the trouble in Europe saps demand for US exports.Says Ken Goldstein, economist at The Conference Board: “These latest results suggest a recovery that will continue through the summer, although it could lose a little steam. The U.S. LEI declined slightly for the first time in more than a year, and its six‐month growth rate has moderated since December.

The markets have been cheered recently because there are few signs of inflation despite strong GDP figures for Q4 2009 and the first quarter of the year. But, the lack of price growth may be hiding faltering demand for goods and service which will not show itself completely until the Q2 GDP numbers are released. Jobless claims, another sightly lagging indicator, recently rose more than expected.

The talk about a double dip recession has almost disappeared…

Douglas A. McIntyre

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