The chorus of economists predicting a quick end to the recession has been ducking the question of what's going on with the index of leading indicators. This measure, which is supposed to be able to peer six months or more into the future, continues to sag. In fact the index, which weighs 11 economic measures, has been flat or in decline since last June, when it peaked above 146 percent of its 1982 level. For January it fell 0.4 percent, to 139.1 percent. Despite the gloom implicit in this lengthy swoon, many economists think the time is ripe for an upturn when figures are released Friday. Hopeful signs: resurgent consumer confidence, soaring stock prices and an expanding money supply.
Watch for: A jump in the index for February of 0.3 percent. That should help dispel the fog of pessimism wrought by recent economic numbers, which have been mostly disappointing.
Afterthought: Fred Gordon, editor of the Plain Talk Investor newsletter, points to the lackluster performance by the leading indicators as prompting his cautionary stance about stock prices. Gordon, citing his long record as "an outspoken bull," warns that huge recent gains in the stock market may be just about over. "The market's fundamental ice is a bit thinner now," he says.
Alternate view: "It is time to abandon fashionable despair for the economics of hope and to begin to prepare for the exciting years leading up to the 21st century," says William B. Hummer, senior partner of the Chicago investment firm Wayne Hummer & Co., in his latest bank bond comment. Hummer says the end of the Gulf War "will have incalculable favorable political and economic effects for the rest of the decade."
NEXT UP: The nation's carmakers Monday report their vehicle sales for mid-March, amid predictions of a slight improvement. Car sales in the first 10 days of the month were at an awesomely depressed 5.9 million annual rate. The pace in Monday's report is expected to pick up to about 6.2 million.
MORE EVENTS: The National Association of Realtors today totes up existing-home sales for February. Durable-goods orders for the month will be reported Tuesday by the Commerce Department, with most analysts expecting them to be flat. Commerce Wednesday provides a further revision of fourth-quarter gross national product, and Friday it reports February new-home sales.
MARKETS: Stock prices backpedaled last week, as the Dow Jones industrial average lost 89.36 points to close at 2858.91.
OUTLOOK: Many analysts began wringing their hands about corporate earnings after last week's revelation by International Business Machines Corp. that first-quarter profits are expected to drop by half. Thom Brown, strategist at Rutherford, Brown & Catherwood of Philadelphia, says, "The market's got a contagious disease: first-quarter earnings disease. This has got a lot of analysts putting a pencil to their papers and rethinking their earnings forecasts."