Weekly Leading Index Falls

The U.S. economy will grow moderately in the foreseeable future, but battered investor confidence and further corporate layoffs could tip the country back into recession, a report showed on Friday.

The Economic Cycle Research Institute's weekly gauge of U.S. economic activity slipped to 116.5 in the week ended Oct. 11 from 118.1 in the previous week.

"There is the risk of a self-fulfilling prophecy where businesses pull back because they fear a recession," and the retrenchment itself triggers a period of renewed economic contraction, said Lakshman Achuthan, ECRI managing director.

But he added that "this latest reading is pointing to slower growth ahead, but it is not forecasting a recession at this point."

"Negative investor and business confidence is beginning to gain the upper hand," over gradual improvements in the real economy, Achuthan said.

The index's growth rate, which smooths out weekly fluctuations, fell to -3.4 percent from -2.1 percent in the preceding week.

The Weekly Leading Index is composed of a balance of several major economic indicators. ECRI designs short- and long-term indexes aimed at predicting business cycles, recessions and recoveries in the world's leading economies.