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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: Jumper who wrote (117844)	12/19/2000 3:48:06 PM
From: Bill	Read Replies (1) \| Respond to of 769670

Poor Bush will inherit the worst economy in 70 years. Message 15030193

To: Jumper who wrote (117844)	12/19/2000 3:53:15 PM
From: gao seng	Respond to of 769670

Clinton recession is official: -Clinton is an idiot. 11:32 CLINTON SAYS U.S. ECONOMY CAN'T SUSTAIN 5 PCT GROWTH; SAYS 2.5 PCT MORE LIKELY 11:29 CLINTON: I DON'T THINK WE'RE GOING TO HAVE A RECESSION WRAP: Fed keeps rates on hold, but warns on economic weakness ... Futures World News - December 19, 2000 15:27 Jump to first matched term Dec. 19-MAR-- (adds more analyst comment in paragraph 4) By Edward Kean and Shihoko Goto, BridgeNews Washington--Dec. 19--The Federal Reserve voted Tuesday to keep U.S. interest rates unchanged despite signs that the economy has slowed markedly, but policymakers said the threat of economic weakness now outweighs the risk of higher inflation--a strong signal that rates may be cut early next year. The Fed's decision to keep the federal funds rate at 6.5% was expected by most economists, but its accompanying statement that the economic risks are tilted toward recession comes only a month after the central bank said the danger of higher inflation outweighed the possibility of a downturn. "I think it is as much as they could have done without lowering rates," said David Orr, senior economist with First Union Capital Markets. "They are now worried most about economic weakness and that is a 180 degree turnaround from their November statement." Jeffrey Palma, senior economist at UBS Warburg, agreed. "Clearly they are setting the markets up for a rate cut in January," he said. The Fed cited several developments indicating weaker economic activity, such as lower demand and corporate profits caused by rising energy costs and signs of "stress" in some financial sectors. It also made no mention of tight labor markets, which had been a source of concern in previous statements. "While some inflation risks persist, they are diminished by the more moderate pace of economic activity and by the absence of any indication that longer-term inflation expectations have increased," the Fed said. The about-face regarding the economic outlook signals the odds are high that the Fed will cut rates at its next policy meeting on Jan. 30-31. But some analysts expressed disappointment that rates were not lowered at the latest meeting. "They should have lowered interest rates today," said Brian Wesbury, chief economist at Griffin, Kubik Stephens & Thompson. "In fact, because they did not, the risks of recession move higher. It will take at least six to nine months for any rate cuts to boost economic growth. Therefore, every day of delay will cause economic activity to slow further." Since mid-year, evidence has accumulated that U.S. economic growth has slowed from its earlier rapid pace. But the signs of slower growth have mounted in recent weeks amid a continuing slide in the stock market, particularly in the technology-heavy Nasdaq, and predictions of an emerging credit crunch. The signs of economic weakness have included two consecutive monthly declines in industrial production, a drop in retail sales in November and reports of weak sales in early December, as well as a sharp rise in business inventories in October. A large unintended rise in inventories can be a signal of impending production cutbacks. Also, a host of companies have issued warnings of weaker-than-expected profits. There also have been hints that the labor market is starting to loosen. Although the jobless rate remains low at 4.0%, payroll job growth has slowed, the average work week has fallen, and the number of new claims for unemployment insurance has risen substantially over the last several months. Earlier this month, Federal Reserve Chairman Alan Greenspan said the economy has slowed "appreciably" and stressed the Fed should be alert to the possibility of excessive slowing in spending. However, most Fed officials have said they do not think the economy is likely to slide into recession and that they have yet to see signs that the economy is slowing excessively. Meanwhile, inflation, excluding energy prices, has remained fairly tame, though it has edged up. The "core" consumer price index in November was 2.6% above its year-earlier level. But an alternative inflation measure deemed more reliable by the Fed, the GDP personal consumption expenditures price index, is up less than 2.0% from its year-earlier level. Also, crude oil prices have begun to retreat from their peaks in the fall. The fed funds rate is the rate commercial banks charge one another for overnight loans. End [slug: FED-RATES] The bridge.com ID for this story is BNBBVFG