NEW YORK - The slowdown in the U.S. economy, coupled with a steady drip of bleak economic data, is starting to echo the conditions that presaged the country's most recent recession.
Data released Thursday by the business group the Conference Board showed its gauge of future business activity dropped for the fourth month in a row January. Its index of leading economic indicators has now fallen 2.0 percent over the last six months, the biggest drop since early 2001.
The index is designed to forecast where the nation's economy is headed in the next three to six months - and persistent, pronounced declines signal that a recession may be around the corner.
'The conditions are nearing those that historically preceded recessions,' said Ataman Ozyildirim, an economist at the Conference Board. 'Every recession is a bit different, but we're becoming more confident that we're nearing those conditions.'
The figures, in conjunction with downbeat news about manufacturing and a murky employment picture, sent the Dow Jones industrial average down more than 140 points Thursday as investors feared the onset of a recession. Broader indexes also closed lower.
Markets had been hoping for economic data to show the economy wasn't shrinking, but signaling enough weakness to spur the Federal Reserve to again slash interest rates in March.
Some dour news came from the Philadelphia Federal Reserve, which reported a much lower-than-expected manufacturing index for February.
While the Labor Department reported a drop in the number of newly laid-off workers filing claims for unemployment benefits, it was seen as only a temporary improvement. Analysts noted that claims offices in California were closed for a day last week for a state holiday, giving laid-off workers less time to file claims.
The four-week average for claims, which gives a better picture of labor market trends, rose to 360,500 - the highest level since claims spiked in October 2005.
The Conference Board report came a day after the Federal Reserve released its updated forecast for slower economic growth, higher unemployment and higher inflation. The dismal outlook for the year was despite the central bank's aggressive interest rate cuts in January.
The Fed nevertheless maintains the country could avoid a recession, which is generally defined as two consecutive quarters of economic contraction.
Some private analysts, however, say the economy has already entered a downturn and expect it to last through the spring.
Officials from the Conference Board say their data shows there isn't one - yet.
The leading index has been approaching a trend that historically precedes recessions, Ozyildirim said. In the months leading up to the 2001 recession, the six-month drop in the leading index was 2.2 percent. Since 1959, the six-month drop before a recession has been closer to 2.5 percent, he said.
But the group's coincident index, which measures where the economy is right now, edged up 0.1 percent in January. That slow but steady growth suggests the economy is not currently in a recession, said Ken Goldstein, the Conference Board's labor economist.
Despite the gain, the six-month growth rate in the coincident index slowed to 0.4 percent, down from a 1.1 percent rate from January 2007 to July 2007.
Weakness in components that make up the index, which for the past two years was concentrated in the housing market, has started spreading.
Four of the 10 components fell in January: stock prices, building permits, manufacturers' new orders for nondefense capital goods and interest rate spread.
The advancing components were real money supply, average weekly initial claims for unemployment insurance, consumer expectations and vendor performance.
Average weekly manufacturing hours and manufacturers' new orders for consumer goods and materials were unchanged.