The steep decline in the local economy, which has caused widespread layoffs and bankruptcies in the last year, may be about to moderate, according to comprehensive figures issued yesterday.

The release of the numbers marked the debut of a new economic index to measure the Washington area economy, one its sponsors are pushing as a reliable barometer.

The new index fell last November, but at a slower rate than it had been dropping earlier in the year. Stephen S. Fuller, who developed the index under the auspices of the Greater Washington Research Center with the sponsorship of the Greater Washington Board of Trade, said the index for December, which will be released in about two weeks, is likely to register an increase, "which suggests we've turned the bend."

At least three more months of evidence after that will be necessary before the possibility that the economy is turning around can be confirmed, he said.

As often happens with economic indicators, no sooner was this one unveiled than people began to argue about it. Michael A. Conte, director of the Center for Business and Economic Studies at the University of Baltimore, questioned the choice of components that make up the index and expressed skepticism about its ability to predict the economy.

Yesterday's presentation by Fuller and other research center officials focused on the positive, highlighting eight conditions that augured an improving economy.

Actually, there are two indexes that, together, are designed to give this area what many other cities and states have had for some years -- a comprehensive and objective way in which to examine the entire metropolitan economy.

The "leading" index, drawn to foretell the economy's future, is composed of four statistical series: new residential electric hookups, sales of durable goods in the metro area, the performance of the share prices of 30 public companies and the national index of leading economic indicators.

A second index, constructed to describe the current state of the economy rather than its future condition, is based on the change in the number of jobs in the area, classified advertising lineage in The Washington Post, passenger boardings at National Airport and the national consumer confidence index.

As they created these two indexes, the authors also calculated what they would have shown had they been available to economists over the past 15 years. Their conclusion was that the current recession could and should have been foreseen.

There were warning signs as long ago as 1986, for example, that the fast-paced growth of the mid-1980s was not being sustained, research center officials said. New residential electric hookups, one of the broadest measures of population growth, peaked in 1986, and so did sales of new single-family homes and town houses. All the figures were adjusted in various ways by the research center to make them consistent.

Passenger boardings at National Airport peaked in early 1987; by 1988, classified ad lineage in The Post and hotel occupancy rates also were turning downward. The number of jobs in the area's construction industry began falling in late 1989. In the fall of 1989, the economic index itself turned negative. By early 1990, the local recession was in full swing.

But few apparently knew it.

"Decisions were being made on assumptions that were overly optimistic. Office buildings were being built ... land was being sold at astronomical prices," said George Grier, a senior associate of the research center and author of a report accompanying the indexes on the roots of the economic downturn.

In some ways, Grier said in his report, this area grew itself into a recession. Housing prices rose so rapidly, for instance, that a correction was inevitable. Population grew so rapidly that traffic became bottlenecked, discouraging workers outside the area from moving here.

Research center officials shied away from using the word "recession," saying their own definition of six consecutive months of job loss had not been met. There is no official definition of a regional recession; many of those who have been laid off or seen their businesses close down are already convinced of a recession.

The creators of the indexes cautioned that this is only the first installment of a new set of figures. They are still in the process of refining their work and have promised to revise the indexes if a better way can be found to construct them and still provide timely information.

As part of the effort, the research center asked a group of outside experts on the local economy to provide advice. One of them, Richard Groner of the D.C. Department of Employment Services, said he thought there was "something to it."

"It's like any index. It's going to bounce around," Groner said. "There's going to be some false readings. But it seems to me it would have performed fairly well {if it had existed} in the past."

However, the University of Baltimore's Conte, who compiles a leading index for the Baltimore area and is writing an academic paper on regional economic indexes, expressed concerns. He said that because each index includes only four components, they are particularly sensitive to fluctuations in any one. The index he generates for the Baltimore area has seven components.

Specifically, Conte said, inclusion of local stock prices makes the leading index vary too much, especially because the national leading index also includes a stock-price component, resulting in an overemphasis on Wall Street activity. And he warned that the index too closely correlates economic growth with population growth.

"It seems to have some problems with its construction that would lead me to say it needs a considerable amount {of} more work," Conte said. "If the proof of the pudding is in the eating, I don't think this pudding is done yet."

Fuller answered that, in fact, the pudding does just what it is supposed to do. The components of the leading index correlate closely with subsequent economic activity, as measured by the change in the total number of jobs. Fuller and those he worked with tried various combinations of components, including using a larger number of them and not using the stock price figures. But the four that were retained worked the best, he said.

Moreover, Fuller said, some figures that he would have liked to include either were not available soon enough or did not go back far enough to allow the historical tests needed to determine their accuracy. Data on initial claims for unemployment benefits, for instance, generally a reliable leading indicator, could not be obtained from suburban jurisdictions for the 15 years that was required.

"One can find fault in any of the components of our index. There are weaknesses in any data set," Fuller said. "You try to minimize those impacts in the way the set is constructed."