Hold on tight folks — things may get a little bumpy. Recent comments by the Fed indicate that there are real concerns that a recession is coming for the US. Here is an excerpt from a report by Jeannine Aversa over at the AP:
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 U.S. might be sliding into recession.
ADVERTISEMENTThe 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 ever more cautious, it said.
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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.
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Federal Reserve Chairman Ben Bernanke, in a speech last week, pledged to aggressively cut a key interest rate as needed to try to prevent all these problems from plunging the economy into a major recession. That may well mean a bold half-point cut at the end of a two-day meeting on Jan. 30. The Fed started cutting rates in September, but some critics on Wall Street and elsewhere say Bernanke should have acted sooner and more forcefully.
“Clearly there is a high level of caution,” said Ken Mayland, president of ClearView Economics. “Everyone’s guard is up to protect and insulate one’s businesses from the high degree of sluggishness that is expected to prevail in the months ahead.”
With voters expressing angst over the economy, the White House and the Democrat-controlled Congress are exploring ways — including the possibility of temporary tax rebates — to get money quickly into the hands of consumers and help stimulate spending. Presidential contenders also are floating their own ideas for rescue packages.
The chairman of Congress’ Joint Economic Committee said he had spoken Monday with Bernanke and found him “generally supportive” of lawmakers and Bush approving a stimulus bill.
Bernanke, who hasn’t supported any specific plan, testifies before the House Budget Committee Thursday.
