Business Notes THE ECONOMY

Until last week, most stock-market investors were confident that the U.S. economy was not headed for a recession anytime soon. A slowdown, when it came, was expected to be gradual -- a soft landing, in the economic argot. Last week that sentiment abruptly shifted as investors became fearful of a bumpier end to the nearly seven-year stretch of economic expansion. Their fit of pessimism gave the stock market its worst week in more than 15 months. The Dow Jones average fell 91.81 points, closing the week at 2440.06.

The sell-off was sparked by a Commerce Department report that the index of leading economic indicators, the Government's most widely watched but not totally reliable forecasting gauge, fell a steep 1.2% in May, its biggest decline in 18 months. The Bush Administration tried to find some positive elements in the trend. Said White House spokesman Marlin Fitzwater: "The economy is healthy and growing at a slower pace, which means less pressure on inflation and interest rates."