Recession?

The Conference Board announced yesterday that its Index of Leading Economic Indicators fell 0.6 percent in December, its third drop in as many months.

Does that qualify as the start of a recession? This index has predicted that a recession occurs if there's a drop for three consecutive months – which it has – or if the index declines by 3.5 percentage points over six months – which it hasn't.

“Certainly we're not in recession now,” said Ken Goldstein, Conference Board economist. “The economy is slower, and it will be slower six months from now. But we're not in recession, and we're not going to be in recession in six months.”

Goldstein attributed the economic slump to higher energy prices, a cold November and December, tight labor markets and generally slowing growth around the world. He said the Board will begin estimating three of its 10 indicators – money supply, new orders for consumer goods and new orders for capital goods – rather than waiting for actual data, in an effort to identify actual recession if it threatens to occur.