U.S. growth forecast to slow in second half

U.S. growth will slow in the second half of 2008 as unemployment rises and stock-market declines erode household wealth, according to an index of leading economic indicators.

The Conference Board’s measure, designed to predict the economy’s performance over the next three to six months, fell 0.1% in June after a 0.2% drop in May.

Rising claims for unemployment insurance, falling equity prices and a slide in consumer confidence contributed to the decline in the measure. The report reinforces evidence that the effect of federal tax rebates will fade in the second half as the housing slump, record fuel prices and credit crunch force households to rein in spending.

“We’re in a very strange period where we’re teetering between negative and positive growth periods,” said Zach Pandl, an economist at Lehman Bros. Holdings Inc. in New York. “We may be seeing weakness in coming quarters.”

The index has fallen 2.1% over the last 12 months, a decline not exceeded since September 2001, during the economy’s last recession.

Six of the 10 indicators pulled down the index reading, led by a slump in the money supply.