TBO.com - TBO is Tampa Bay Online

Fed Outlook Paints Picture Of Rising Recession Danger

ADVERTISEMENT

By JEANNINE AVERSA, The Associated Press

Published: January 17, 2008

WASHINGTON - Retailers, home builders and many manufacturers should brace for even more rough times ahead, a somber Federal Reserve suggested Wednesday amid growing fears that the United States might be sliding into recession.

The Fed's snapshot of business conditions showed a national economy losing momentum heading into the new year and a future riddled with uncertainty.

The persistent housing slump and harder-to-get credit are making people and businesses more cautious, it said.

The Fed report was the unwelcome icing on a recent batch of economic indicators, ranging from a plunge in retail sales to a big jump in unemployment, raising concern that the country is heading for its first recession since 2001.

At the beginning of last year, many economists put the chance of a recession at less than 1-in-3; now an increasing number say 50-50 or even worse.

Goldman Sachs, the biggest investment bank on Wall Street, thinks a recession is inevitable this year.

The Fed report said the economy did grow during the survey period ,from the middle of November through December, but more slowly than during the late fall. Credit problems intensified in December as did troubles in the housing market. That threw Wall Street into new turbulence.

The economy probably grew at a feeble pace of about 1.5 percent or less in the final three months of last year and will stay weak in the first quarter of this year as consumers, major shapers of the nation's economic health, tighten their belts.

After retailers suffered their worst sales season in five years in 2007, "the outlook for 2008 among retail merchants was cautious," the Fed said in its report. The outlook for housing also remains gloomy: "weak during the first part of 2008."

Share this:

Loading Comments...

Email Print

ADVERTISEMENT