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Harvard Expert
Says US Economy In Recession's Grip
By Bloomberg
16/03/08 "Gulf
News" -- - Atlanta: Harvard University economist
Martin Feldstein, a member of the group that dates business
cycles in the US, said the nation has entered a recession that
could be the worst since World War II.
"I believe the US economy is now in recession,'' Feldstein,
president of the National Bureau of Economic Research (NBER),
told the Futures Industry Association conference in Boca Raton,
Florida.
"Could this become the worst recession we have seen in the
postwar period? I think the answer is yes. I would emphasise the
word 'could'."
Feldstein's remarks represent the first time that a member of
the NBER's business-cycle dating committee has publicly
described the current downturn as a recession. The economy may
not respond quickly to Federal Reserve interest-rate cuts, and a
package of tax rebates and investment incentives will offer only
a temporary boost, he said.
Investors on Friday raised their bets that the Fed will slash
interest rates by a full percentage point this week after the
central bank and JPMorgan Chase agreed to provide emergency
funding to Bear Stearns, the fifth-largest US securities firm.
Bush administration officials including Treasury Secretary Henry
Paulson have avoided saying the economy is in a recession.
"We have slowed down very significantly,'' Paulson said on
Friday. "I'm not getting into'' whether it is a recession. The
economy expanded 0.6 per cent at an annualised pace last
quarter, and economists predict the pace will slow to 0.1 per
cent in January to March.
The US unexpectedly lost jobs in February for the second
consecutive month, a government report showed on March 7. A
private report Friday showed consumer sentiment this month sank
to a 16-year low.
"By almost every measure the US economy is moving sideways or
slightly down for the last few months,'' said Feldstein, who in
January put the odds of a recession at more than 50 per cent.
© Al Nisr Publishing LLC 2007
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