Rise in economic gauge suggests brighter outlook

WASHINGTON -- A gauge of future economic activity posted a solid increase in November, providing further evidence that the economy is gaining strength.

The Conference Board said Thursday that its index of leading economic indicators rose 0.5 percent in November following a 0.9 percent gain in October, which had been the strongest showing in eight months.

Economists said the two months of solid gains in the index signaled that the economy was gaining momentum and the risks of a recession were receding.

Conference Board economist Ken Goldstein cautioned that "this somewhat positive outlook for the domestic economy is at odds with a global economy that appears to be losing stream. ... A deeper-than-expected recession in Europe could easily derail the outlook for the U.S. economy."

The strongest positive factor in the November index was a narrowing of the spread between short-term and long-term interest rates, indicating declining fears about future inflation. That and a gain in housing permits were the biggest positive factors in the index, overcoming weakness from a falling average workweek in manufacturing.

A separate report Thursday showed the overall economy grew at an annual rate of 1.8 percent in the July-September quarter. That was the best showing this year although it was revised down from an estimate of 2 percent growth because of less spending on health care services.

Many economists believe growth in the current October-December quarter could be a much stronger 3 percent.