Inflation could drag down growing economy, data say
NEW YORK -- A private research group said economic growth should strengthen by summer but cautioned that consumer concerns over rising gas and food prices could drag on the expansion.
The Conference Board said Thursday that its index of leading economic indicators rose 0.4 percent in March. The index, which is a measure of future economic activity, has increased for nine consecutive months.
Growing demand for U.S. manufactured goods and a rebound in requests for building permits helped drive last month's gains. Six of the index's 10 components rose. The index rose 1.0 percent in February, revised higher from the initial estimate of 0.8 percent.
The leading indicators began moving sharply higher last fall, coinciding with a decline in the unemployment rate and a stock market rally.
Still, the trade group said one of the components of its index -- a consumer confidence survey -- tumbled to a two-year low last month. The primary reason for the decline is that many people are increasingly worried about inflation.
Consumers are spending more, but the rise in costs for basic necessities could force them to spend less on discretionary goods. That could slow economic growth. Consumer spending accounts for 70 percent of economic activity.
Gasoline jumped 5.6 percent last month and has risen nearly 28 percent in the past year, the government reported last week. Consumers paid an average price of $3.84 a gallon nationwide yesterday, according to the travel group AAA. That's up $0.30 from March and nearly $1 from a year ago
The government also said that retail food prices rose 0.8 percent in March, the largest increase in almost three years. Consumers paid more for fruits and vegetables, dairy products, chicken and beef.
The Conference Board, a private research group based in New York, compiles data that has mostly already been released about real estate, manufacturing, employment, consumer confidence and financial markets. It uses that data to calculate the leading indicator index. The Conference Board includes its own estimates about manufacturers' new orders and the country's money supply.