Economic Indicators Up, No Thanks to Home Building

While the nation’s recession is likely to continue into the near term, the economy’s deterioration will be far less intense than in recent quarters, according to The Conference Board, whose Leading Economic Index released Thursday shows a significant 1.0% increase in April. The index posted a 0.2% decline in March and a 0.5% decline in February. “The question is how long before declines in activity give way to small increases,” says Ken Goldstein, economist at The Conference Board. “If the indicators continue on the current track, that point might be reached in the second half of the year.” The movement in April’s index is the first increase seen in seven months, and the strengths among its components exceeded the weaknesses for the first time in one and a half years, the Board says. The largest positive contributor to the index was stock prices, followed by the interest rate spread, consumer expectations and vendor performance, among others. The largest negative contributor was once again, real money supply, followed by a plunge in building permits, which highlights the on-going struggle felt within the housing market — the sector which most economists say must begin its recovery before the economy will be able to fully recuperate. Builders, in particular, are feeling the pains of an ailing economy, as they are forced to compete with deeply discounted, foreclosed homes. But recent, seasonal strength in home values — which have been free falling since early 2008 — signals early stages of price stabilization. And signs of stabilization in the housing sector is likely to further boost the index’s consumer confidence indicator. Write to Kelly Curran.

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