ECRI Index Shows Weak but Steady Rebound
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U.S. economic growth may be slowing but the country will not slip back into recession, according to a weekly report published Friday.
The Economic Cycle Research Institute said its weekly gauge of U.S. economic activity fell to a six-month low of 120.1 last week from 121.4 in the previous week.
The index was dragged lower by a dip in applications for new mortgages, a decline in stock prices and a rise in initial claims for unemployment benefits, said Anirvan Banerji, research director at ECRI.
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"The decline in the index does not translate into recession, but it does translate into a slowdown in growth," he said.
But a recent drop in the number of corporate bond deals represents a ray of hope in a cloudy economic picture, Banerji said, even as financial markets worry that corporate accounting scandals could have thrown a wrench into an already sputtering recovery.
Fewer bond deals help corporations in the same way that low interest rates help home buyers -- the lower demand makes it cheaper for firms to borrow money, he said.
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The index's growth rate, which smooths out weekly fluctuations, fell to 1.5 percent from 2.3 percent in the preceding week. A weak reading, but nowhere near recessionary levels, says Banerji. Last October the growth rate sank to as low as 9 percent.
The Weekly Leading Index is composed of a balance of seven major economic indicators. ECRI designs short- and long-term indexes aimed at predicting business cycles, recessions and recoveries in the world's leading economies.