Lately housing, credit and financial crises are threatening to
push the USA into a deep recession. To try to limit the damage, the
Federal Reserve has aggressively cut a key interest rate, now at 2.25
percent, to stimulate buying and investing by individuals and
businesses. Many economists had predicted the Fed might drop it key that
rate again when it next meets April 29-30.
Federal Reserve Chairman Ben Bernanke said the U.S. economy could face a
mild recession but that growth should pick up as the impact of
aggressive interest rates cuts are felt. He said the Fed expects the
economy to strengthen in the second half of the year partly due to
stimulative monetary and fiscal policies. "Much necessary economic
and financial adjustment has already taken place, and monetary and
fiscal policies are in train that should support a return to growth in
the second half of this year and next year," Bernanke said.
According to the survey of Professional Forecasters, the GPD* growth in
the current quarter is projected at an annual rate of 0.7 percent (it
increased at a 0.6 percent in the fourth quarter of 2007). The
forecasters expect growth of 1.3 percent in the second quarter. The
forecasters see growth of 2.8 percent in each quarter of the second half
of the year. The US government will release actual GDP first-quarter
results later this month.
In conclusion, the economical trend does not look bad.
The stock market may recover in a few months. However, the overall
economical data are still poor. Stock investors should be cautious in
selecting stocks because some companies may have the difficulties to
cope with the current conditions.
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*) GDP (gross domestic product) measures the value of all goods and
services produced within the United States and is the best barometer of
the US economic health
