Confidence Hits Pre-Election Low : Economy: Meanwhile, the index of leading indicators declines for the second time in three months.

Consumer confidence fell in September to its lowest pre-election reading in 20 years, and the government’s chief economic forecasting gauge showed that the economy is on the verge of stalling again, according to reports released Tuesday.

The figures suggested that economic problems will last well beyond the Nov. 3 elections--a development that may bode ill for President Bush’s reelection chances.

The Conference Board said consumer confidence fell to 56.4 in September from 59.0 in August. The previous pre-election low mark was 80 in September, 1980, when incumbent Jimmy Carter lost to challenger Ronald Reagan.

The Commerce Department said its index of leading indicators, designed to forecast economic activity three to six months ahead, fell 0.2% in August after a slim 0.1% rise in July and a 0.3% dip in June.

Three straight declines in the leading index have often signaled an impending recession, and analysts said the last three months showed the economy was getting very close to another downturn.

The latest report virtually ensures that whoever is sworn in as President in January will be confronted with a very weak economy.

Economists were braced for worse news later this week with the release Friday of the unemployment report for September. Many expect 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% as the economy is hit with a new wave of layoffs.

The Conference Board said that since it began making its confidence survey 20 years ago, the incumbent President has lost whenever the index has been below 100 just before the election.

Democrat Bill Clinton has hammered George Bush on the state of the economy, calling the President’s economic management the weakest since the 1930s.

“The nation’s sluggish economy and weak job market are continuing to dampen consumer spirits,” the Conference Board said.

August’s decline in the leading economic indicators was widespread, with seven of the 11 statistics posting setbacks.

The biggest 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.

“When you add it all up, it suggests the economy will be growing slowly, if at all, six months down the road,” said Mark Zandi, an economist at Regional Economic Associates in West Chester, Pa. “The economy is still in a state of convalescence and won’t begin to show any signs of vigor until next year.”

The unemployment report due Friday will be affected by a number of special factors. Hurricane Andrew put people out of work in Florida and Louisiana, a General Motors Corp. strike is adding to joblessness in the Midwest and the end of a federally funded jobs program will put as many as 150,000 teen-agers back on the streets.

Analysts are expecting employers to tell the government that they’ve shed more than 100,000 jobs in September, with the unemployment rate increasing to either 7.7% or perhaps rising as high as 7.8%, matching the eight-year high reached in June.

“Our main picture is one where the economy is floundering,” said Lars J. Pederson of Chemical Securities Inc.

Economists are divided over whether the Federal Reserve will attempt to stimulate the weak economy soon with yet another reduction in interest rates.