U.S. economy rises again

Press, 1 May 1981, Page 7

U.S. economy rises again

NZPA-Reuter Washington An index designed to predict future trends for the American economy rose in March for the first time in four months.

The Commerce Department reported that its index of leading economic indicators rose 1.4 per cent last month, after declines of 0.5 per cent in February, one per cent in January, and 0.4 per cent in December.

The report was another in a recent string of Government releases that have shown the economy performing much better than private economists had predicted it would.

Recent reports revealed the economy grew at a robust annual rate of 6.5 per cent and the inflation rate slowed to 9.6 per cent during the first quarter. The encouraging economic indicators have come at a time when President Reagan is attempting to get his economic recovery programme, a package of steep tax and budget cuts, through the Congress. Only one day before the latest figures were published, the President, making his first public speech since he was shot,

said the economy was “sick" and needed his “cure.”

A number of Congressmen, most notably Democrats, have suggested that the President’s programme may be too drastic a step to take at a time when the economy is doing relatively well. Reagan Administration economists have countered by saying the current improvement in the economy is a temporary phenomenon and that the outlook for the rest of the year will be bleak, particularly if the President’s programme is not enacted soon.

Privately economists caution that the 1.4 per cent rise in the index of leading indicators in March should not necessarily be taken as a sign that all is well with the economy.

The experts say it generally takes three months of consistent movements in the index, either up or down, before a trend is clearly established.

They also note that the index is subject to substantial revisions and March’s increase could be considerably altered when the updated report comes out next month.