U.S.
growth forecasts slashed after weak data
The
more data that gets released, the gloomier economists have become on
growth for the second quarter.
16
July, 2012
After
the reports on retail sales and business inventories released Monday,
a MarketWatch-compiled economist poll for second-quarter GDP growth
is down to 1.3%, down from 1.5% on Friday, 2% a month ago, and as
high as 2.6% six months ago.
The
gloomiest new forecast came from Stephen Stanley of Pierpont
Securities, who now sees just 0.6% growth in the April-to-June
quarter, and only 1.25% in the current September-ending quarter.
“The
economy has downshifted from muddling to near-stagnation,” said
Stanley, who called the report showing retail sales sliding 0.5% in
June “awful.”
He
does see two big implications from the ever-deteriorating economy.
The first is that the Federal Reserve, which Stanley calls
“hyperactive,” is likely to attempt to ride to the rescue.
Federal
Reserve Chairman Ben Bernanke is due to speak to the Senate Tuesday
and the House of Representatives on Wednesday, but many see the
annual Jackson Hole, Wyo. conference held by the Kansas City Fed at
the end of August as the most likely venue for the chief to announce
a third round of quantitative easing. Read Bernanke preview.
The
second implication, Stanley says, is that there is a “low” but
increasing chance that Congress and the president could try to reach
a deal to avoid the so-called fiscal cliff before the election. The
fiscal cliff is the name given to the series of tax hikes and
spending cuts that will be triggered at the beginning of 2013 unless
legislative action is taken.
Steve
Goldstein is MarketWatch's Washington bureau chief.
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