ECON - US stays one step ahead of recession

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Times

US stays one step ahead of recession BY LEA PATERSON, ECONOMICS EDITOR

AMERICA has staved off the threat of recession, with official figures revealing that the economy continued to grow, albeit at a snail’s pace, during the second quarter of the year.

US national income did not, as had been widely feared, contract between April and June, according to official gross domestic product (GDP) figures released yesterday. GDP posted an annualised rise of 0.2 per cent, above Wall Street expectations but below the Government’s initial estimate of 0.7 per cent. The quarterly increase was the weakest for more than eight years.

Stock markets initially rallied at the news, which economists said made the prospect of a technical recession in the US — defined as two successive quarters of falling GDP — far less likely. Several analysts also took heart at the composition of the GDP numbers, which showed that consumer spending had risen by more than first thought, while stockpiles had been falling fast.

Ian Shepherdson, chief US economist at High Frequency Economics, said: “The good news is that consumers’ spending was revised up to an almost healthy 2.5 per cent from 2.1 per cent.”

Later, however, share prices fell back amid concerns that, with profits under pressure, any US recovery was likely to be slow. News overnight that that the International Monetary Fund was preparing to cut its world growth forecast added to market jitters.

The dollar scored modest gains against the euro, holding steady at about 91 cents, with the single currency pressured by concerns that the European Central Bank would today fail to cut rates. These fears were fuelled by comments from the head of the Bundesbank, who said that the primary objective of eurozone policy was to rein in inflation, not stimulate growth.

Copyright 2001

-- Anonymous, August 30, 2001

Answers

We seem to have gotten so used to listening to lies and fudging of statistics from Washington that our perceptions are now useless. We *are* in a recession and have been for quite some time. The only reason we haven't seen it slide deeper yet is that due to the phony positive statements about our economy a lot of folks have continued to borrow ever deeper into debt and *spend* that money. This increased spending, and the continuous increase in money supply being generated by the Fed has given the erroneous impression that things are hanging together. They are not. We are only just now starting the long slippery slide into economic depression. IMHO.

-- Anonymous, August 30, 2001

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