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LEADING ECONOMIC INDICATOR SIGNALS HEALTHIER ECONOMY

 LEADING ECONOMIC INDICATOR SIGNALS HEALTHIER ECONOMY
 DETROIT, April 22 /PRNewswire/ -- Business conditions should improve


more than generally anticipated in the second half of this year, according to the latest increase for the Advance Economic Barometer (AEB). In March, the AEB rose to a level of 2.6, its highest mark since July 1988, and its sixth consecutive monthly increase.
 Improvement for the leading economic indicator, compiled by Manufacturers Bank, is a cause for optimism regarding the economy in the second half of 1992. For the first time in more than a year, all three components of the AEB were positive. The most significant gain was reported for the Commerce Department's Index of Leading Indicators, which had been flat since July 1991. In addition, another component, the yield curve spread, is portending an improved economy. Specifically, aggressive monetary stimulation from the Federal Reserve Board has reduced short-term interest rates to their lowest levels in 20 years. This has caused the spread between the federal funds rate and 30-year treasury bond yields to widen to nearly 4 percentage points, its widest mark in 30 years. A wide spread, or deep yield curve, has traditionally been a harbinger for improved economic growth. Finally, improved inflation-adjusted money growth also contributed to March's jump for the AEB.
 At a current level of 2.6, the AEB is projecting real GDP growth of 4 percent or better by the end of 1992. In the near term, the AEB is projecting real GDP growth in excess of 2 percent beginning with the current quarter. This would mark the end of the sub-par economic performance the U.S. has endured for the past 11 quarters. Since the second quarter of 1989, real GDP growth rate has not exceeded 2 percent, its longest string of below-average performance since the Great Depression.
 The AEB combines three series into a single, balanced and comprehensive leading indicator: (1) inflation-adjusted money growth, (2) yield-curve spread, and (3) the Commerce Department's Index of Leading Indicators.
 -0- 4/22/92
 /CONTACT: David G. Sowerby, vice president and economist, Manufacturers National Corporation, 313-222-4829/
 (MNTL) CO: Manufacturers Bank ST: Michigan IN: FIN SU: ECO


DH -- DE016 -- 1238 04/22/92 11:58 EDT
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Date:Apr 22, 1992
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