Sep 24, 2002 By Brad Foss Ap Business Writer 2 min read

NEW YORK (AP) – A key gauge of U.S. economic activity fell for the third straight month in August, declining more than experts had predicted. The New York-based Conference Board on Monday reported its Index of Leading Economic Indicators dropped 0.2 percent to 111.8, after falling a revised 0.1 percent in July. Analysts had expected an August decline of 0.1 percent.

The index measures where the overall U.S. economy is headed in the next three to six months. It stood at 100 in 1996, its base year.

Seven of the 10 indicators that make up the leading index declined in August, including manufacturers’ new orders for non-defense capital goods, building permits and the index of consumer expectations, the Conference Board said.

The U.S. economy is “not getting any thrust from capital spending at this point,” said Bill Barker, investment strategy consultant at RBC Dain Rauscher in Dallas.

Barker said consumer spending has held up surprisingly well in recent months, with purchases of big-ticket items such as cars and homes leading the way. His fear is that consumer confidence will erode as the stock market continues to sputter and that increased talk of war with Iraq will keep more people in front of their televisions instead of out shopping.

Conference Board economist Ken Goldstein said the data showed the nation’s “weak recovery could stall, especially if the consumer market starts to slow.”

“There is now the threat of a slowdown,” Goldstein added, “because unlike in June or July, the latest decline was widely diffused – only one of the 10 components had a significant positive contribution.”

The drop helped push stocks lower, sending the Dow Jones industrial average down 153.67, or 1.9 percent, to 7,832.35. The Nasdaq composite index fell 32.20 points, or nearly 2.6 percent, to 1,188.89.

Contributing to the dour mood on Wall Street was the fact that economists do not expect Federal Reserve policy-makers to further cut interest rates when they meet Tuesday. The Federal Reserve has left short-term interest rates at 40-year lows this year.

The Conference Board’s coincident index, which measures current economic activity, rose 0.1 percent in August to 115.0 The index of lagging indicators, which reflects changes that have already occurred, fell 0.1 percent last month to 100.7.

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