The Conference Board released a report Monday showing that the leading economic indicators fell more than expected in August.
The stock markets dropped in response to the falling of the indicators, with the NASDAQ slipping to a six-year low. The leading index, which is an important measure of U.S economic activity, fell by 0.2 percent last month. Seven out of the 10 indicators decreased this month, including interest rate spread, unemployment claims, vendor performance, building permits, manufacturer's orders for capital and consumer goods and materials and consumer expectations. The only bright spots were money supply, average manufacturing hours and stock prices, all of which went up.
Wisconsin Secretary of State Doug La Follette said the economy has been in trouble for more than a year, and the downturn may be due to the recent spate of corporate scandals.
\People are very nervous about the health of American industry,"" La Follette said. ""We've got corporate executives slicing off millions and millions and billions of dollars, and that makes the stock market very nervous.""
However, Ken Goldstein of The Conference Board said the drop in the indicators isn't a result of corporate scandals.
""This is [due to] the lack of stronger consumer spending and the lack of any measurable improvement in business investment and equipment,"" Goldstein said.
According to La Follete, unlike 15 years ago, over half of the population has money invested in the stock market, and economic trouble may affect investors on a personal level.
La Follette added that the recent recession contributed to Wisconsin's budget deficit, and a new downturn would make the situation worse.
""Thompson's budget projections three years ago counted on the economy to keep growing, and then it stopped growing at the rate everyone thought it would ... and now we have this giant hole in the budget,"" he said.
Goldstein said he thinks the next economic shift will be a change for the better, adding that the indicators may go up if consumers maintain their spending levels, corporate profits lead to new investments, and exports increase.
""If all of that begins to happen, then before the snow melts this winter, we'll get some good, maybe even better than decent, economic news,"" Goldstein said. ""But that's not quite where we are now.""
But La Follete said he's not so sure that the economy will improve.
""I don't see any good news [for the winter],"" he said. ""In fact, I see mostly bad news.""
He added that a possible war with Iraq would cost taxpayers billions and hurt the economy even more.
""It's kind of scary,"" he said.
