CHARTING THE ECONOMY

EPA to look for rock bottom

The Economic Planning Agency plans to convene a meeting of its committee of economists possibly in mid-May to pinpoint the bottoming out of the economy, EPA officials said Tuesday.

The committee will examine readings from a series of diffusion indexes, which are released every month, before delivering its verdict.

The diffusion indexes — three sets of 12 of the leading, coincident and lagging indicators — are used as gauges to measure the current state of the economy and foreshadow its future course. The indexes are also used to determine whether an economy is on an upward or downward path.

An EPA official said the committee will also be asked to examine the indexes to determine whether the economy has passed a trough, or the lowest point of the economic cycle.

“The aim of the planned committee meeting is to discuss whether the economy has produced statistical readings strong enough to attest to such a passage through the trough,” the official said.

The agency will convene a second meeting of the committee in mid-June in view of the findings of the mid-May meeting, the EPA officials said.

Some economists believe the economy bottomed out around last April.

The diffusion index of coincident indicators has stayed above the boom-or-bust line of 50 percent for eight consecutive months through February, while the index of leading indicators remained above the line for 12 straight months.

But the index of lagging indicators, which sheds light on whether positive indications on the coincident and leading indexes have favorably affected household spending and the unemployment rate, has stayed below the line for 29 months.

A diffusion index reading above 50 percent is believed to indicate an economic expansion in the future, while one below that level is taken to indicate an upcoming economic contraction.