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U.S. leading indicators fall
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October 22, 2001: 10:44 a.m. ET
An index of future economic activity drops in September, as expected.
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NEW YORK (CNNmoney) - A closely watched gauge of future economic activity in the United States fell in September, a research firm reported Monday, showing weakness in the world's largest economy in the weeks following the Sept. 11 terrorist attacks.
The Conference Board, a New York-based business research group, reported its Index of Leading Indicators fell 0.5 percent in September to 109.2 after falling a revised 0.1 percent in August. Economists surveyed by Briefing.com expected the index to fall 0.5 percent.
The decrease in the September index is the largest one-month decline since January 1996, the board said. The index usually is closely watched because it indicates where the overall U.S. economy is headed in the next three to six months. It stood at 100 in 1996, its base year.
"The two-month decline in the index suggests that the already-weak economy is likely to remain weak into next year," Conference Board economist Ken Goldstein said. The slide in the index reflects a significant slowdown in the manufacturing and services sectors, Goldstein said.
U.S. stocks rose in early trading, while U.S. Treasury bond prices were mixed.
The Federal Reserve has cut its target for short-term interest rates nine times this year, twice since last month's terrorist attacks, in an effort to fend off a recession.
"Without the aggressive expansionary policy adopted by the Federal Reserve ... this drop would have been much deeper," the Conference Board said.
The Fed is widely expected to cut rates again at its next policy meeting, scheduled for Nov. 6, and the government is expected to provide more economic stimuli in the form of tax cuts and spending.
Still, many economists expect a recession this year, as the attacks disrupted travel and shipping and have thrown cold water on consumer confidence, already shaky after a year-long slowdown in business spending led to hundreds of thousands of job cuts.
The Conference Board said six of the 10 components of the leading index fell in September: stock prices, average weekly initial claims for unemployment insurance, index of consumer expectations, average weekly manufacturing hours, building permits, and manufacturers' new orders for non-defense capital goods.
Money supply and interest-rate spread were the only components that rose, while vendor performance and manufacturers' new orders for consumer goods and materials held steady for the month.
The Conference Board's "coincident" index, indicating the current state of the economy, fell 0.1 percent to 116.6 after holding steady in August.
The "lagging" index, indicating the economy's performance in the recent past, fell 0.2 percent to 104. 
- from staff and wire reports
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