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Board: Economy's Limping But It's Moving

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The Associated Press

Published: June 20, 2008

NEW YORK - The economy, hobbled by higher fuel and food prices, tighter credit and a depressed housing market, is limping along at a snail's pace, a private business group said Thursday.

The New York-based Conference Board said Thursday its economic indicators rose 0.1 percent in May, matching expectations of economists surveyed by Thomson/IFR. The increase in the indicators, a measure of future economic activity, equaled April's 0.1 percent advance.

The index is designed to forecast economic activity in the next three to six months based on 10 components, including stock prices, building permits and initial claims for unemployment benefits.

"The economy is very weak heading into the summer, with gas and utility bills possibly heading even higher," said Ken Goldstein, Conference Board economist. "But latest data suggest the economy has not fallen into a contraction and may not undergo one in the second half of the year."

Concerns remain that the country could slip into a recession, but many analysts now think the 130 million households that received economic stimulus payments from the government will help the nation avoid a severe downturn.

The Labor Department reported Thursday that jobless claims fell by 5,000 last week to 381,000 after having surged by 27,000 the previous week.

The small improvement was not enough to keep the four-week average from rising to 375,250, pushing it close to the level reached in early April, when the average had jumped to highs not seen since the wave of layoffs following the 2005 Gulf Coast hurricanes.

The nation's unemployment rate soared to 5.5 percent in May, up from 5 percent in April. That represented the biggest one-month jump in 22 years and served as a stark reminder of the pressures the labor market is facing from the weak economy.

Economists expected last week's claims to drop by slightly more than they did. In the previous week, ending June 7, a total of 44 states and territories reported an increase in claims and nine states reported declines.

After California, the state with the largest increase was Florida, up 6,164, reflecting more layoffs in construction, trade, services, manufacturing and agriculture.

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