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ADVANCE ECONOMIC BAROMETER STALLS IN APRIL

 ADVANCE ECONOMIC BAROMETER STALLS IN APRIL
 DETROIT, May 21 /PRNewswire/ -- The Advance Economic Barometer (AEB)


suffered a minor setback in April after posting four consecutive monthly gains from December through March. In April, the AEB dropped to a level of 1.7, a 0.3 decline from the previous month. Despite April's minor setback, at current levels, the AEB is projecting 2.5 percent to 3 percent real GDP growth in the second and third quarters.
 April's decline for the AEB resulted from weaker money supply growth. Last month, inflation-adjusted M3 declined 1.8 percent, a reversal from improvements recorded in the first three months of 1992. Low interest rates have caused savers to transfer funds from time deposit accounts to checking accounts, thereby depressing growth in the broader monetary aggregates such as the M3 money supply. However, rapid monetary stimulation currently being pursued by the Federal Reserve Board is expected to boost the money supply and the AEB in the second half of this year. Despite weaker money growth, the AEB's two other components, the yield-curve spread and the government's Index of Leading Indicators, both improved. In fact, the yield-curve spread is nearly 4.25 percentage points, its widest level in more than 30 years. A wide or steep yield-curve has traditionally been a precursor to faster economic growth.
 The AEB combines three series into a single, balanced and comprehensive leading indicator: (1) inflation-adjusted money growth, (2) yield-curve spread, and (3) Commerce Department's Index of Leading Indicators.
 -0- 5/21/92
 /CONTACT: David G. Sowerby of Manufacturers National Corporation, 313-222-4829/
 (MNTL) CO: Manufacturers National Corporation ST: Michigan IN: FIN SU: ECO


KK -- DE022 -- 2905 05/21/92 13:47 EDT
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Publication:PR Newswire
Date:May 21, 1992
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