A key barometer of future economic conditions fell sharply in August as both jobs and stocks rattled consumers’ nerves, The Conference Board reported today.

The U.S. leading index dropped 0.6 percent last month to 137.8, with just one of 10 indicators — real money supply — advancing. Based on revised data, this index increased 0.7 percent in July and decreased 0.1 percent in June.

The leading index has been alternating between monthly increases and decreases in 2007, and, as a result, it is essentially at the same level as in January 2007, The Conference Board reported. In August, the largest negative contributions to the leading index were due to consumer expectations, initial claims for unemployment insurance, and stock prices. Housing permits and interest-rate spread continued to make negative contributions through August.

The leading index increased 0.5 percent from February to August (a 1 percent annual rate), and the six-month diffusion index suggests that the strengths among the components became slightly more widespread in July and August, according to The Conference Board.

Also, real GDP, which measures the total value of goods and services produced by the United States in a given period, grew at a 2.3 percent average annual rate in the first half of this year (including a 0.6 percent rate in the first quarter and a 4 percent rate in the second quarter).

The Conference Board said that “the current behavior of the leading index suggests that economic growth is likely to continue in the near term, albeit at a slow pace.”

The coincident index, a gauge of the current state of the economy, increased again in August and it continues to rise on a somewhat slower, but steady, trend. It grew 0.9 percent from February to August (a 1.8 percent annual rate), down from the 2.5 percent average annual rate in 2006. Industrial production and employment have been making the largest positive contributions to the coincident index in recent months, but employment fell slightly in August. Despite slower growth, the strengths among the coincident indicators continued to be very widespread in recent months.

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