Economic Data May Hint at Slower Recovery

Economic reports this week are expected to show that the U.S. economic recovery is losing steam as consumer confidence dropped and businesses placed fewer orders.

Consumer confidence has fallen this month to the lowest level in nine years, a survey due Friday from the University of Michigan probably will show. On the same day, a report from the Commerce Department is expected to show that orders for durable goods, big-ticket items meant to last at least three years such as cars, computers and appliances, fell for a third time in the last four months.

Waning consumer and business demand means growth probably will slow in the final three months of the year, economists said. Companies including Gateway Inc., the fourth-biggest maker of personal computers, cut sales and earnings forecasts last week.

The University of Michigan’s index of consumer sentiment for October is expected to sink to 81, the lowest level since September 1993, from 86.1 last month, according to economists.

Businesses are ordering less as sales flag. Durable goods orders in September are expected to drop 1.8% after a 0.4% decline the previous month. Excluding transportation equipment, orders probably fell 0.4%.

The housing market, although strong, has probably peaked, two other reports are expected to show Friday. New-home sales probably fell 0.6% to an annual rate of 990,000 last month from a record 996,000 in August, economists said a Commerce Department report probably would show.

A separate report from the National Assn. of Realtors is expected to show that previously owned homes sold at an annual rate of 5.35 million in September. Although up 1.3% from the previous month, sales are off the record-setting 6.05-million pace reached in January.

The Federal Reserve’s “beige book,” an anecdotal report card on regional economic conditions due out Wednesday, is expected to support expectations that the recovery may be stalling.

The report will acknowledge “the slowing in activity and the mixed performance” of the economy, said Joseph Abate, a senior economist at Lehman Bros. Inc. in New York.

Fed policymakers will use information from the beige book to base their decisions on the direction of interest rates when they next meet Nov. 6.

The index of leading economic indicators, a gauge of the economy’s performance over the next three to six months, probably declined for a fourth straight month in September, falling 0.2%, economists said. The Conference Board, a New York-based research group, will report on the indicators today.