Heat Treat Industry News
May 27, 2008
Economists' Recession Fears Receding
Reported by the National Association of Manufacturers
In a front-page story, the Wall Street Journal (5/14, A1, Evans, Lahart, subscription required) reports that a "funny thing happened to the economy on its way to recession: It's taken a detour." That "is the view of a growing number of economists -- including some who not long ago were saying a recession was all but inevitable. They note that stock and credit markets have steadily improved since the Federal Reserve intervened to keep Bear Stearns Cos. from bankruptcy in early March, while a series of economic reports have been stronger than expected." Wachovia economist Jay Bryson "now puts the odds of recession at 45 percent, down from 90 percent in April, and expects growth in gross domestic product of 0.6 percent at an annual rate in the first and second quarters of this year, followed by 1.2 percent growth in the third and fourth quarters." The Journal notes, however, that "plenty of economic warning signs remain, as reflected in plunging consumer confidence data and polls reflecting deep unease among voters."
In the Economic Scene column in the front of the New York Times's (5/14, C1) Business Day section, David Leonhardt agrees, writing that "only a month ago," the "notion that the economy could avoid a recession altogether seemed fanciful. It looks less fanciful today." He believes that "the economy seems to have stabilized," pointing out that the "pace of layoffs has eased a bit, stocks have risen and the Fed has signaled that the rate cuts are over for now." So "you can make an argument that the economy has survived its period of maximum danger."
The Financial Times (5/17, Politi, Bryant, subscription required) reported that Treasury Secretary Henry Paulson said "Friday that housing remained 'the biggest risk' to the U.S. economy, as new data showed construction of family homes dropping to the lowest level in 17 years." Paulson also "said that the correction in the housing market had 'further to go', but that the U.S. was 'working through the excess inventory.'" He "struck an optimistic tone on the health of financial markets." Paulson said, "We are seeing signs of progress as capital and credit markets stabilize. The markets are considerably calmer now than in March." The New York Times (5/17, C3, Nizza) noted that Paulson "delivered a guardedly optimistic message to business leaders on Friday, saying that the economy was moving toward a rebound after months of malaise."
On the front of its Business section, the Washington Post (5/17, D1, Montgomery) added that Paulson said the housing sector "remains a major worry, as prices continue their two-year decline."
19 May 2008
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