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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: LTK007 who wrote (5915)	11/15/2001 1:31:14 PM
From: LTK007	Respond to of 99280

Fed's Parry: Short-Term Outlook Rocky By Marjorie Olster--Thursday November 15 11:46 AM ET dailynews.yahoo.com SEATTLE (Reuters) - San Francisco Federal Reserve (news - web sites) President Robert Parry said on Thursday the short-term U.S. economic outlook is not too bright due to a high level of uncertainty caused by the Sept. 11 attacks and the economy is unlikely to rebound until next year. In a speech before the University of Washington Business School, Parry said the economy, which shrank 0.4 percent in the third quarter, is likely to weaken further in the final months of the year. He also sees the 5.4 percent jobless rate rising. ``Admittedly, what we can see looks pretty rocky,'' Parry said. ``When will the recovery kick in? Most likely sometime next year. But frankly, there is no way to know exactly when.'' The attacks on the World Trade Center and the Pentagon (news - web sites) in September were the final straw for a struggling U.S. economy. ``These attacks struck while we were vulnerable, pushing us from sluggish growth to an outright contraction,'' Parry said. Aggressive Federal Reserve monetary policy action -- 10 interest rate cuts so far this year, bringing benchmark overnight borrowing costs down 4.5 percentage points to 2.0 percent since January -- coupled with government tax cuts and spending programs have helped to lay the foundation for a rebound. In addition, Parry said tumbling energy prices -- oil prices this week fell below $20 a barrel -- make the long-term outlook ``a good deal more positive.'' But Parry, who currently is not a voting member of the Federal Reserve's policy-setting Open Market Committee, cited a number of wild cards for the outlook. ``An important one going forward is the spread of economic weakness around the world,'' he said. Indeed, the International Monetary Fund (news - web sites) earlier on Thursday revised downward its global outlook, forecasting growth below the critical 2.5 percent level this year and next, which signals global recession. Other factors making the outlook uncertain include prospects for unemployment -- which Parry described as ``grim'' -- to worsen. This in turn may dampen consumer confidence, hurting growth prospects. Parry also noted that industrial output and business investment still are dropping sharply. ``For the current quarter, I'd have to agree with what most forecasters are saying. We almost certainly face further rises in the unemployment rate, which could put even more of a damper on consumer confidence. And the fall-off in activity is likely to be sharper than it was in the third quarter,'' he said.