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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (5692)	1/21/2004 3:16:23 PM
From: yard_man	Respond to of 110194

multi-family starts drove the number -- down for single dwellings edit: not that it matters any

To: mishedlo who wrote (5692)	1/21/2004 3:39:03 PM
From: Crimson Ghost	Read Replies (2) \| Respond to of 110194

U.S. bankers see Fed rate rises starting in June Wednesday January 21, 12:49 pm ET By Andrea Hopkins (Adds details) WASHINGTON, Jan 21 (Reuters) - An expected revival in the U.S. job market and a modest uptick in inflation will prompt the Federal Reserve to begin a series of gradual interest-rate rises in June, a top bankers' group predicted on Wednesday. A panel of 10 senior economists who make up the American Bankers Association's (News - Websites) Economic Advisory Committee forecast real economic growth of 4.2 percent this year, on a fourth quarter- over-quarter basis, compared with 4.4 percent in 2003. Job growth, which has lagged the overall recovery, will accelerate as companies ramp up staffing to meet demand and productivity growth slows from its "exceedingly strong" pace, the group said. "Employment will start showing signs of improvement now that we are more than two years into the economic recovery," said committee chairman Lynn Reaser, forecasting the jobless rate will drop to 5.5 percent by the end of 2004 from December's 5.7 percent. The long wait for a pickup in employment has put pressure on President George W. Bush and jobs are expected to loom large in the November election. About 2.3 million non-farm jobs have vanished since Bush took office in January 2001. The ABA committee forecast monthly employment growth would reach 200,000 during the first half of 2004 -- above the 150,000 jobs most economists believe are needed each month just to keep up with population growth. RATE RISE IN JUNE The group forecast the Fed will slowly raise short-term interest rates this year, but likely not before June. Seven of the 10 panelists expect a rate increase at the Fed's June meeting, with three calling for a quarter of a percentage point increase and four forecasting a larger half- point rise. Three members saw rates holding at 45-year-lows of 1 percent after the June meeting. The core inflation rate -- which strips out volatile food and energy costs -- is expected to rise, averaging 1.5 percent compared with just 0.9 percent in 2003, but underlying price rises will remain low because of gains in productivity and significant excess production capacity, the group said. "The major risk of deflation is behind us. As 2004 progresses, companies should see a gradual firming in pricing power and the underlying rate of inflation should edge slowly higher, but remain well contained," Reaser said. Manufacturing should recover as capital spending and exports revive and companies rebuild inventories, while the red-hot housing market would cool slightly, but remain a positive contributor to growth, the group said. Reaser said rising oil prices, a collapse in the value of the U.S. dollar or another Sept. 11-style attack posed downside risks to the outlook. But she said it was more likely that the group's growth forecast was too low, with stronger exports, tax-cut stimulus and a calming of geopolitical risk possibly boosting the economy more than expected.