WASHINGTON: The US economy's weakness will stretch well into next
year, a Federal Reserve official warned Friday. Competitive economies
Ghosts of 1929
2008: Year of global financial crisis
"We likely are in for a protracted period of poor economic
performance,'' said Charles Evans, president of the Federal Reserve
Bank of Chicago.
The economy lurched into reverse in the summer as worried consumers
slashed spending. Many analysts believe the economy will continue to
shrink through the rest of this year and into the next, more than
meeting a classic definition of recession.
"The US economy is now clearly in the midst of a substantial
downturn,'' Evans said in a speech to economists in Indiana. ``Given
the magnitude of the problems that we face, we could see activity
remaining quite sluggish through much of 2009.''
A recovery is expected to take hold ``more firmly'' in 2010 and 2011,
but at this time, it is very difficult to judge how long the downturn
might last and how deep it ultimately will be,'' he said.
Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, in
separate remarks, sounded a bit more optimistic about the timing of a
recovery.
options dwindle as shares fall under $4
Looking ahead, many analysts expect the U.S. economy to regain
positive momentum sometime in 2009,'' Lacker said in a speech in
Maryland. ``That strikes me as a reasonable expectation.''
The Fed officials' remarks come just days after the Federal Reserve
sharply downgraded projections for economic activity this year and
next, which will drive unemployment higher. The nation's unemployment
rate zoomed in October to 6.5 percent, a 14-year high.
A trio of crises housing, credit and financial have badly damaged the
economy.
To ease some of the pain, the Federal Reserve on Oct. 29 slashed its
key interest rate to 1 percent, a level seen only once before in the
last half-century. Many economists predict the Fed will lower rates
again at its last meeting of the year on Dec. 15-16.
Besides cutting rates, the Fed has taken a flurry of unprecedented
actions to ease the financial crisis and break through a credit clog
so that banks will lend money more freely. The government also is
rolling out a $700 billion financial bailout package and taking other
steps to restore financial stability.
Source: ET
No comments:
Post a Comment