All recent signs point to recession

NEW YORK - The slowdown in the U.S. economy, coupled with a steady drip of bleak economic data, is starting to echo the conditions that presaged the country's most recent recession.

Data released Thursday by the business group the Conference Board showed that in January its gauge of future business activity dropped for the fourth month in a row. Its index of leading economic indicators has now fallen 2.0 percent over the past six months, the biggest drop since early 2001.

The index is designed to forecast where the nation's economy is headed in the next three to six months -- and persistent, pronounced declines signal that a recession may be around the corner.

"The conditions are nearing those that historically preceded recessions," said Ataman Ozyildirim, an economist at the Conference Board.

"Every recession is a bit different, but we're becoming more confident that we're nearing those conditions."

The figures, in conjunction with downbeat news about manufacturing and a murky employment picture, sent the Dow Jones industrial average down more than 140 points. Broader indexes also closed lower.

Markets had been hoping for economic data to show that the economy wasn't shrinking, but signaling enough weakness to spur the Federal Reserve next month to again slash interest rates.

While the Labor Department reported a drop in the number of newly laid-off workers filing claims for unemployment benefits, it was seen as only a temporary improvement. The four-week average for claims, which gives a better picture of labor market trends, rose to 360,500 -- the highest level since claims spiked in October 2005.

The Conference Board report came a day after the Federal Reserve released its updated forecast for slower economic growth, higher unemployment and higher inflation. The dismal outlook for the year was despite the central bank's aggressive interest rate cuts in January.

The Fed nevertheless maintains that the country could avoid a recession, which is generally defined as two consecutive quarters of economic contraction.

But some private analysts say the economy has already entered a downturn, and they expect it to last through the spring.

Officials from the Conference Board say their data shows there isn't one -- yet.