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Strategies & Market Trends : Coming Financial Collapse Moderated -- Ignore unavailable to you. Want to Upgrade?

To: EL KABONG!!! who wrote (606)	9/3/2001 3:07:55 AM
From: EL KABONG!!!	Respond to of 974

usatoday.com 08/30/2001 - Updated 11:11 PM ET Sputtering economy looms over policymakers' talks By Dina Temple-Raston, USA TODAY What a difference a year makes. Last summer, economic policymakers meeting in Jackson Hole, Wyo., were trying not to look smug. It looked as if the elusive soft landing had been achieved — economic growth was slowing to a 3% annual clip — and central bankers were preparing to take a victory lap. But 12 months later, the mood has shifted. Recession fears abound as top economists and policymakers gather at the Rocky Mountain resort town for the annual meeting hosted by the Kansas City Federal Reserve Bank. President Bush has said he is "deeply worried" about the sluggish U.S. economy, economists are talking about a slow recovery, and Corporate America is bracing for quarters of lackluster profits and sales. "The meeting is taking place at a time when the economy is in a precarious position," says former Fed governor Alan Blinder, who will attend this year's meeting. "And that certainly changes the tenor since last year's meeting." With attendees including Fed Chairman Alan Greenspan and International Monetary Fund Managing Director Horst Kohler, the formal topic of the meeting today and Saturday is "Economic Policy for the Information Economy." But the U.S. economy and the Fed's action to try to re-ignite growth will likely be the focus of discussion during the off-the-record talks in the corridors of the remote Jackson Lake Lodge. "The slowdown does mean the mood this year will be different than it was last," Blinder says. "The U.S. economy isn't in disastrous shape, but it isn't doing that well either, and that's bound to put a damper on things." The government announced Wednesday that the economy came close to stalling in the spring, growing at an annual rate of just 0.2% in the second quarter. That was the slowest quarterly growth in 8 years and the worst quarterly performance since the economy shrank 0.1% in early 1993. Analysts are watching the proceedings this weekend for any signals Greenspan might send about the economy. "This will be the first time we've heard from him since his testimony before Congress, so this will be closely watched," says Jan Hatzius, economist at Goldman Sachs. "This will give Greenspan, and the rest of us listening, an opportunity to look at the longer-range issues." When Greenspan testified before the Senate Banking Committee July 24, he said he saw the beginnings of a bottom to the slowdown. Whether he reaffirms that or says the economy is rebounding more slowly than he originally thought will be key. The Fed has cut U.S. interest rates seven times this year in a bid to boost economic growth. So far, the 3-percentage-point decrease in the target for short-term rates, from 6.5% to 3.5%, has done little to boost the economy, and that has some Fed members worried. Fed officials are already internally split over further rate cuts, with some members worrying that each additional cut will fuel inflation when the economy eventually recovers. More rate cuts could also set off a chain of worrisome events, including an abrupt drop in the dollar as investors move toward higher interest rates in other countries. A sharply weaker dollar could also cause investors to abandon U.S. stocks, which would batter an already weak U.S. stock market. Analysts also worry that more rate cuts could overinflate home prices, which are already rising at a heady 8% clip nationwide. Some economists worry that could cause a dangerous bubble, whose eventual collapse would badly hobble any recovery. KJC