Signs Raise Doubts About Slowdown

A new survey of East Coast manufacturers and a surge last week in home mortgage refinancings suggest the U.S. economy may not yet be slowing as much as some analysts expect.

The Federal Reserve Bank of Philadelphia’s general economic index - compiled from a survey of about 150 manufacturers in eastern Pennsylvania, southern New Jersey and Delaware - rose to 17.3 this month from 9.2 in December, which means the number of companies reporting stepped-up activity surpassed those reporting weakening business. Analysts had expected the index to fall to 5.7 this month.

“The slowdown may be exaggerated. There’s no doubt the drop in interest rates is going to support the economy,” said Kevin Flanagan, an economist at Dean Witter Securities in New York. “As ‘98 kicks off, the momentum is going to be tough to slow down.”