Recession May Be One of Mildest on Record

The recession is shaping up as one of the shortest and mildest on record. In fact, it may already be over, private economists said Thursday, based on various upbeat reports.

The Conference Board reported that its index of leading economic indicators, a key gauge of future activity, shot up 0.6% in January, its fourth consecutive monthly increase.

“The strong signal from the indicators is that the recession is ending and that the recovery could be more vigorous than earlier anticipated,” said Ken Goldstein, a senior economist with the New York-based industry group that issues the index.

While the leading index was flashing signals of a rebound, another report Thursday showed that last year’s slowdown may not have been as severe as first believed.

The Commerce Department reported that the nation’s trade deficit narrowed by 11.4% in December to $25.3 billion, its best showing since September.

This unexpectedly large improvement sent economists scurrying to upwardly revise estimates for overall economic activity in the fourth quarter. Many said the gross domestic product may have risen by 1% in the October-December quarter, based on the stronger trade showing, instead of the originally reported 0.2% increase.

The National Bureau of Economic Research, the official arbiter of when recessions begin and end, has said the downturn began in March, ending a record 10-year stretch of prosperity.

The economic research bureau is not expected to issue a ruling on the end of the downturn for several more months.

If current indications hold up and the third quarter, when the GDP fell at a 1.3% rate, is the only negative period, the drop in economic output during the recession will be just 0.3%, making this the mildest recession in U.S. history. The National Assn. for Business Economics said Thursday that 60% of the economists on its forecasting panel believe the recession is over.

The NABE’s newest forecast put economic growth at 1.5% for 2002 and an even stronger 3.8% in 2003.

The Labor Department reported Thursday that the number of Americans filing new claims for unemployment benefits rose by 10,000 to 383,000 last week.