Output of the nation's factories, mines, and utilities declined by 0.3% between July and August. This was the first time that industrial production had fallen this year, following seven consecutive months of increase. On the strength of the earlier gains, however, overall industrial output during August 2002 was at a level 0.4% higher than one year earlier. Manufacturing sector production-almost 87% of total industrial output-eased by 0.1% during August, less than the overall industrial (including mining and utilities) average.

The Conference Board's Consumer Confidence Index (CCI) declined for the fourth consecutive month during September. Following a cumulative loss of almost 16 points between May and August, the composite CCI fell yet another point during September. Furthermore, the portion of the Conference Board's survey that measures actual American household buying plans for the six months showed significant deterioration over the month. It's clear that the sluggish economic recovery and heightened concerns about a war with Iraq have caused consumers to pull back.

The nation's manufacturing sector declined marginally in September after seven consecutive months of overall growth, according to the Institute for Supply Management's (ISM) latest comprehensive "Report On Business." And the ISM's index level fell to 49.5 during September (an index measure of greater than "50" indicates expansion) after having risen to a healthy 56.2 during June. But the new orders sub-index, which has important "leading indicator" significance, rose to 50.2 in September. It appears any further contraction in manufacturing should be shallow and short-lived.

Although the Conference Board's latest summary of leading economic indicators (LEI) suggests that the chances of a "double-dip" recession have increased a bit, we'd still put the odds at only about 35%. In other words, it's still more unlikely than likely. Nevertheless, seven of the ten indicators that make up the LEI fell during August. And the current three-month-swoon reflects worrisome declines in new orders of both consumer and capital goods - as well as softness in softer measures of consumer expectations and equity values.