The government's chief economic forecasting gauge fell 0.2 percent in August, the second decline in the past three months, as the economy continued to suffer widespread weakness, the Commerce Department said Tuesday.
Meanwhile, consumer confidence in the economy dipped for a third straight month in September, according to a widely followed survey done by the Conference Board, a business research group.The consumer sentiment level fell to 56.4 in September, down from 59.0 in August. The Conference Board said the September reading was the lowest pre-election reading it has obtained in 20 years of surveys. The previous low was 80 in September 1980, a year when the incumbent, Jimmy Carter, lost to challenger Ronald Reagan.
The decline in the Commerce Department's Index of Leading Indicators followed a slight 0.1 percent increase in July and a 0.3 percent June decline, which had been the first drop in six months.
The index of 11 forward-pointing economic statistics is eerily repeating last year's performance in which a strong first half was followed by a string of weak numbers as the recovery from the 1991-92 recession faltered.
Tuesday's report and other glum statistics in recent weeks have caused some economists to fear that the country could be heading for a "triple dip," in which economic activity stalls for a third time.
The latest report added to the bad economic news facing President Bush in his re-election bid and virtually ensures that whoever is sworn in as president in January will be confronted with a very weak economy. The leading index is designed to predict economic activity anywhere from three to nine months down the road.
Economists were braced for even worse news later in the week with the release Friday of the unemployment report for September. Many expected that this report, the last look at the most politically sensitive economic statistic before the election, would show the nation's jobless rate edging up to 7.7 percent as the economy is hit with a new wave of layoffs.
For August, the decline in the leading index was widespread with seven of the 11 statistics posting setbacks.
The largest setback occurred in the price of raw materials. Falling prices for basic commodities are seen as a negative because they often indicate falling demand.
Other negative influences came from weekly unemployment claims, which edged up during August, business delivery times, a drop in the backlog of unfilled manufacturing orders and a decline in demand for consumer goods. In addition, building permits were also down and growth in the nation's money supply slowed.
Three of the indicators made positive contributions, with the biggest plus coming from a slight gain in consumer expectations. Rising stock prices and an increase in plant and equipment orders were also positive factors.
Economists said the leading index was just the latest bit of negative news depicting an economic recovery that is showing few signs of life.
While overall economic growth has been positive for five consecutive quarters, the pace of activity has been the slowest of any recovery on record, and economists said they don't look for that to change any time soon.