Economic indicators fall in March

NEW YORK -- A forecast of the U.S. economy's direction pointed southward in March, indicating more slow growth, as consumers and businesses were fixated on the war.\nBut with the conflict virtually over, preliminary data for April were more promising -- holding out hope for a possible turnaround later this year.\nThe New York-based Conference Board said its Index of Leading Economic Indicators, which measures where the economy is headed in the next three to six months, fell by 0.2 percent last month to 110.6. That was in line with analysts' expectations and followed a revised drop of 0.5 percent in February and an 0.1 percent increase in January.\nConference Board economist Ken Goldstein raised concern over a possible slowdown in consumer spending, which accounts for two-thirds of all economic activity.\n"In addition to intensified nervousness over oil prices, war, and the potential of a terror attack, it is the more fundamental plummeting of consumer expectations that raises the specter of a fall-off in consumption growth," he said.\nEd Peters, chief investment officer at PanAgora Asset Management in Boston, agreed the war was "a drag on the economy" in March, but he believes consumer consumption will remain on track now that the battle appears over.\n"People have been worried about that for a long, long time. As long as unemployment stays below 6 percent, there isn't really a big problem with consumer spending," he said. "It got soft mostly because of the war. People got caught up watching the war, instead of doing what Americans are supposed to be doing -- spending."\nSome had hoped the end of the war would motivate businesses to make big capital investments, but the Conference Board warned that history may repeat itself.\n"A decade ago, the end of fighting (in the Persian Gulf War) didn't deliver much impetus to the domestic economy," Goldstein said. "As was the case then, an end to the fighting may do little to change trends in the U.S. economy."\nThe Index of Leading Economic Indicators, which includes 10 components, stood at 100 in 1996, its base year.\nFor March, half of the factors rose, such as stock prices and manufacturers' new orders for consumer goods and materials. The negative contributors were a drop in building permits and real money supply, higher average weekly unemployment claims and lower consumer expectations.\nSome of the indicators are already in for April and are reversing recent declines, particularly in money supply, the stock market, building permits and the yield curve.\n"What happens to the rest of the indicators could balance that, offset that or reinforce it -- and that's what we don't know yet," Goldstein said.\nBased on early April data, Ian Shepherdson, chief U.S. economist for the research firm High Frequency Economics of Valhalla, N.Y., said "a sustained run of declines now seems unlikely" for the index -- a positive indicator for the broader economy.\nIn afternoon trading, the Dow Jones industrial average was down 19.46, or 0.2 percent, at 8,318.19, having gained 1.6 percent last week.\nThe broader market was also lower. The Nasdaq composite index fell 2.48, or 0.2 percent, to 1,423.02, following a weekly advance of 4.9 percent. The Standard & Poor's 500 index fell 2.62, or 0.3 percent, to 890.96, after climbing 2.9 percent last week.\nThe coincident index, which measures current economic activity, held steady at 115.3 in March after falling 0.2 percent in February. The Conference Board said this index is unlikely to move significantly because the economy is not really going anywhere. During the six-month period through March, the coincident index increased only 0.1 percent.\nThe lagging index, which tracks past economic changes, fell 0.1 percent to 99.2 last month.