Archive for Tuesday, August 23, 2011

Survey: No recession, but weakness will endure

August 23, 2011

Advertisement

— Another recession isn’t likely over the next 12 months. Neither is any meaningful improvement in the economy.

That’s the picture that emerges from an Associated Press survey of leading economists who have grown more pessimistic in recent weeks. They say high unemployment and weak consumer spending will hold back the U.S. economy into 2012.

Their gloominess comes at a time when Europe’s debt crisis threatens to infect the global financial system. It also coincides with an annual economic conference late this week in Jackson Hole, Wyo., and speculation about whether Federal Reserve Chairman Ben Bernanke will unveil any new steps there to help the economy.

Worries that another recession is nearing and that the European crisis will spread have led to a roughly 15 percent drop in stock prices in the past month. Economists say the Great Recession ended in June 2009.

What makes a solution so difficult is that the fear gripping investors isn’t just a symptom of economic distress; it’s also a cause of it. Sinking stock prices frighten consumers and businesses. They then spend and invest less. Investors respond to lower corporate sales by selling stocks, worsening the market declines.

Each day that the stock market sinks “puts another nail in the coffin of the recovery,” said Beth Ann Bovino, senior economist at Standard & Poor’s.

“I had been saying it was a half-speed recovery; now, it’s a quarter-speed recovery,” Bovino said.

She is among 43 private, corporate and academic economists surveyed this month by the AP. As a group, they are more downbeat than when surveyed eight weeks ago. Among their conclusions:

• The likelihood of a recession within the next 12 months is 26 percent. In June, the economists had put the likelihood at 15 percent.

• The economy will inch ahead at an annual rate of 2 percent in the July-September quarter and 2.2 percent from October through December. Though stronger than the growth for the first half of 2011, that isn’t enough to lower the unemployment rate much, if at all. And next year will barely be stronger.

•l Weak consumer spending poses a “major” risk to the economy. In June, Americans cut their spending for the first time in nearly two years. And consumer spending fuels about 70 percent of the economy.

• The unemployment rate will end this year at 9 percent and 2012 at 8.5 percent. Those rates are slightly less than July’s 9.1 percent. But they’re more consistent with a recession than a recovery.

• The Fed’s efforts to keep interest rates at record lows may not succeed in promoting growth or easing unemployment. But its low-rate policies will likely boost stock prices.

The economists do foresee economic growth, job creation, consumer spending and home prices all rising over the next year. But the gains they expect are so slight that many Americans won’t notice.

Comments

rockchalk1977 3 years, 10 months ago

The national debt is growing at $3 million a minute while Obama vacations and plays golf at Martha's Vineyard. Don't worry be happy!

http://latimesblogs.latimes.com/washington/2011/08/obama-national-debt.html

tbaker 3 years, 10 months ago

I agree with you RockChalk, but play nice. We didn't like it when the lefties bitched about Bush going to Crawford.

Richard Heckler 3 years, 10 months ago

I say all the folks are guessing meaning no one knows what the hell is going on.

How about we eliminate the possibilities of these to repeat themselves by throwing people in jail and remove them from the financial industry?

The Reagan/Bush Savings and Loan Heist(Cost taxpayers $1.4 trillion) http://rationalrevolution0.tripod.com/war/bush_family_and_the_s.htm

Wall Street Bank Fraud on Consumers under Bush/Cheney sent the economy out the window costing taxpayers many many $$$ trillions and millions of jobs. http://www.dollarsandsense.org/archives/2009/0709macewan.html

ONLY 3 financial institutions instead of several were at risk so why $700 billion in bail out money? http://www.democracynow.org/2009/9/10/good_billions_after_bad_one_year

Flap Doodle 3 years, 10 months ago

Where have I seen all those links before? Oh, wait, they were right here on this award-winning website dozens and dozens of times.

Ron Holzwarth 3 years, 10 months ago

“A billion here, a billion there, and pretty soon you're talking real money." - Everett McKinley Dirksen

Richard Heckler 3 years, 10 months ago

August 23, 2011

Covering Up Wall Street Crimes: Matt Taibbi Exposes How SEC Shredded Thousands of Investigations

An explosive new report in Rolling Stone magazine exposes how the U.S. Securities and Exchange Commission destroyed records of thousands of investigations, whitewashing the files of some of the nation’s largest banks and hedge funds, including AIG, Wells Fargo, Lehman Brothers, Goldman Sachs, Bank of America and top Wall Street broker Bernard Madoff. Last week, Republican Sen. Chuck Grassley of Iowa said an agency whistleblower had sent him a letter detailing the unlawful destruction of records detailing more than 9,000 information investigations. We speak with Matt Taibbi, the political reporter for Rolling Stone magazine who broke this story in his latest article, "Is the SEC Covering Up Wall Street Crimes?" [includes rush transcript]

http://www.democracynow.org/2011/8/23/covering_up_wall_street_crimes_matt

Commenting has been disabled for this item.