AP: Snapshot of U.S. Economy about to get a lot bleaker

Posted by Kendall Harmon

"The economy is going to limp along for the next few months," said Gus Faucher, an economist at Moody's Analytics. There's even a one in three chance it could slip back into recession, he said.

Many temporary factors that boosted the economy earlier this year are fading. Companies built up their inventories after cutting them sharply in the recession to match slower sales. The increase provided a boost to manufacturers, but now many companies' stockpiles are in line with sales and don't need to grow as much. In addition, the impact of the government's $862 billion fiscal stimulus program is lessening. That leaves the private sector to pick up the slack. But businesses are cutting back on their spending on machines, computers and software, according to a government report earlier this week. And the housing sector is slumping again after a popular home buyer's tax credit expired in April.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsHousing/Real Estate MarketLabor/Labor Unions/Labor MarketPersonal FinanceStock MarketThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--The Fiscal Stimulus Package of 2009The U.S. GovernmentFederal ReserveTreasury Secretary Timothy GeithnerPolitics in GeneralHouse of RepresentativesOffice of the PresidentPresident Barack ObamaSenate

Posted August 27, 2010 at 8:00 am [Printer Friendly] [Print w/ comments]

1. David Keller wrote:

I hope the Fed Chairman in his speech today says freeze all spending, put Obamacare on hold, repeal all the new taxes Obamacrae will require and extend the Bush tax cuts. Of cousre, he won’t.

August 27, 10:23 am | [comment link]
2. David Keller wrote:

Sadly, I was right. He didn’t.

August 27, 11:28 am | [comment link]
3. Don R wrote:

This is perversely amusing:

In addition, the impact of the government’s $862 billion fiscal stimulus program is lessening.

Christina Romer said last Fall that the stimulus program had already provided most of the benefit it would provide, and the effect of the remaining spending would taper off to essentially zero by mid-2010.  At the time she said that, less than one-fourth of the stimulus funds had been spent.  By now, she expected it to be an economic drag.  Technically, I suppose “lessening” is true, but the statement is still misleading.

August 27, 12:25 pm | [comment link]
4. robroy wrote:

“There’s even a one in three chance it could slip back into recession.”

Aack. I hate the abuse of statistics. If you flip a coin once, there is either a 0% or 100% chance that it will end up heads. Statistics does not apply to a single throw of the die nor a single flip of a coin and it certainly doesn’t apply to the economy .

August 27, 12:31 pm | [comment link]
5. David Keller wrote:

#4—I am 100% certain we will not slip back into recession.  That’s because we haven’t really gotten out of the first one yet.

August 27, 6:02 pm | [comment link]
6. Ruthie wrote:

Could ‘cash for clunkers’ be revisited? It’s time for a new car. Oh, and I’m thinking of quitting my job so I could get a better cellular phone package - one that doesn’t cost me anything!

August 27, 10:47 pm | [comment link]
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