US leading index points to continued recovery

The US economic recovery appears to be intact. Bloomberg reports:

The index of U.S. leading economic indicators rose in September for a sixth straight month, showing the economy is likely to expand into early 2010.

The Conference Board’s gauge of the economic outlook for the next three to six months climbed a greater-than-forecast 1 percent, contributing to the biggest six-month gain in 26 years, the New York-based private research group said today...

Economists forecast the U.S. leading indicators index would increase 0.8 percent, according to the median of 60 estimates in a Bloomberg News survey. Projections ranged from increases of 0.3 percent to 1.1 percent. The Conference Board revised August figures down to show a 0.4 percent increase from a 0.6 percent previously reported gain.

The number of Americans filing first-time claims for unemployment insurance rose by 11,000 to 531,000 last week, figures from the Labor Department showed. The reading exceeded the 515,000 median estimate of economists surveyed and served as a reminder that the labor market will be slow to recover.

The average number of applications over the past four weeks, a less volatile measure, showed some improvement as it fell to the lowest level in nine months.

Home prices nationally fell 0.3 percent in August from July and were down 3.6 percent over the past 12 months, a report from the Federal Housing Finance Agency also showed.

Still, Federal Reserve Bank of Boston President Eric Rosengren said the US economy remains at risk of relapsing into recession after expanding in the second half of 2009.

Nomura Research's Richard Koo even thinks that the US faces the risk of a lost decade like Japan. From Bloomberg:

“This isn’t a cold, its more like pneumonia,” said Koo, author of “Balance Sheet Recession,” a 2003 book about the malaise that hit Japan after its stock and real-estate markets crashed in 1990. “We still need more government spending,” he said, adding it could take “three to five years to get out of this mess, even under the best of circumstances.”