A gauge of future US economic growth fell to its lowest level in five years and its annualised growth rate also declined, a sign that growth should still be a bigger concern than inflation for policy-makers, a research group said on Friday.
The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index fell to 127.5 in the week to August 1 from 128.1 in the previous period.
The decline in the index - to its lowest since 127.3 hit in the week to August 15, 2003 - was due to an increase in claims for jobless benefits and weaker stock prices, and was partly offset by lower interest rates, Lakshman Achuthan, managing director at ECRI, said in an instant message interview. "With the WLI falling to a fresh five-year low, a business cycle upturn looks increasingly distant," he wrote.
The index's annualised growth rate slipped to a 15-week low of negative 8.9 percent from minus 7.6 percent. "While monetary policy makers would like to raise rates they can't, because the recession is not yet drawing to a close," Achuthan added. "So even as the Fed may continue to roar on the inflation front, it remains a paper tiger."
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