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Economy Shows no Sign of Slowing
Leading indicators set record; new home sales hit all-time high
By Eileen Alt Powell   Associated Press
NEW YORK — A key gauge of U.S. economic activity rose a sturdy 0.4 percent in December, suggesting that the nation's record expansion will continue well into Year 2000.

The Conference Board said today its Index of Leading Economic Indicators increased to 108.7, yet another record level, in December from 108.3 the month before. The rise was in line with analysts' expectations.

In Washington, the Commerce Department reported today that the sales of new homes rose 4.5 percent in December, helping to boost the total for the year to an all-time high.

The two strong economic readings contributed to stock market jitters as it waited for Federal Reserve policy-makers, meeting in Washington for a second day, to announce moves aimed at cooling the economy and hedging against inflation. An interest rate increase was expected.

The Dow Jones industrial average was up slightly by late morning, adding to two days of strong gains on expectations that even a fourth rate hike since June would not stop a broad rise in corporate earnings.

The Conference Board, a business-funded research group, said that nine of the 10 components that make up its leading index rose in December. The 10th, which measures the average workweek in manufacturing, was unchanged, it said.

"The leading indicators point to a continuation of the expansion during 2000," the report said.

The index is watched closely because it is a barometer for economic activity in the next three to six months.

The nation's current economic expansion, now at 107 months, is widely expected to continue. Many analysts estimate that the nation's gross domestic product is growing at an annual rate of about 3 percent to 3.5 percent in the current quarter following the blistering 5.8 percent growth rate in last year's fourth quarter. The GDP is a measure of the output of all the nation's goods and services.

"This report is more evidence that the economy has a great deal of momentum," said Bryan Jordan, an economic analyst at Banc One Investment Advisors in Columbus, Ohio. "It's not about to slow on its own any time soon."

Jordan said he expects the Fed to raise rates as much as a full percentage point this year but still predicts that the economy will grow about 3.7 percent in 2000, down just slightly from last year's 4 percent growth.

The reading for December is the highest since 1959, the first year the index was calculated in a way that is comparable with current figures. The record mark was first passed in November.

The report from the New York-based group said that its index of coincident indicators, measuring current activity, increased 0.2 percent in December to 126.8 from a revised 126.5 in November. The index of lagging indicators, which tracks past activity, went up 0.5 percent to 109.4 in December from 108.9 percent in November.

The separate home sales report said that Americans purchased new single-family homes at a seasonally adjusted annual rate of 900,000 in December, aided by better-than-normal weather. December's 4.5 percent increase, bigger than the 4 percent rise many analysts were forecasting, followed a 6.3 percent decline in November.

For all of 1999, new-home sales rose 2 percent to a record 904,000, surpassing the previous record of 886,000 in 1998.

Existing-home sales tracked by the National Association of Realtors also set a record in 1999 of 5.2 million despite the upswing in mortgage rates.

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