OGExtremeOne wrote:
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>> Breaking from MoneyNews.com
>> OECD: U.S. Economy 'Moving Sideways'
>> PARIS =97 The Organization for Economic Cooperation and Development do=
wngraded
>> its economic forecasts on Thursday for the United States, the euro zon=
e and
>> Japan for the first half of 2008.
>> The OECD says the U.S. economy is now essentially "moving sideways."
>> Moreover, Europe and Japan do not have room to ease fiscal or monetary=
>> policy, the 30-nation group warned.
>> The OECD cut its growth forecast for first-quarter gross domestic prod=
uct in
>> the United States to 0.1 percent on the quarter and predicted GDP woul=
d be
>> flat in the second quarter.
>> That assessment covers only the first half of the year, and the OECD d=
id not
>> provide comparative figures.
>> "The U.S. economy is now essentially moving sideways, if not contracti=
ng
>> outright," the OECD said. "It may be premature to declare a recession,=
but
>> with the pace of activity so far below potential, economic slack is wi=
dening
>> rapidly."
>> Economists have been lowering their economic forecasts as the U.S. slo=
wdown
>> has spread elsewhere and as the credit crunch precipitated by the subp=
rime
>> crisis cuts deeper.
>> "The effects on demand are likely to be significant but are hard to ga=
uge,"
>> the OECD said, adding that "share and housing prices declines, particu=
larly
>> in the U.S., are also holding back demand, with some lags."
>> The global housing cycle has turned for the worse, the group said, wit=
h the
>> U.S. residential investment slump likely to shave about a percentage p=
oint
>> from annual GDP growth this year as it did in the past two years.
>> It also said real household incomes are being squeezed by soaring ener=
gy and
>> food prices. That is despite the fact that the euro zone and Japan hav=
e
>> benefited from currency appreciation against the sagging U.S. dollar.
>> For the euro zone, the OECD now forecasts first-quarter GDP growth of =
just
>> 0.5 percent, with no improvement in the second quarter, which is expec=
ted to
>> show just a 0.4 percent gain.
>> "In the euro area, the deceleration has been less abrupt; but growth i=
s set
>> to remain on the low side of potential for some time, even though expo=
rts so
>> far seem to hold up well in the face of euro appreciation," the group =
said.
>> For Japan, the OECD said the pace of underlying growth appears to be
>> softening despite support from buoyant neighboring Asian economies. Th=
e
>> organization expects first-quarter GDP to be up 0.3 percent and predic=
ts a
>> rise of 0.2 in the second quarter.
>> "The case for policy stimulus is stronger in the U.S. than in Europe o=
r
>> Japan, and both U.S. monetary and fiscal policy makers have already ac=
ted
>> forcefully," the OECD said.
>> "In the euro area, by contrast, the near-term outlook for activity and=
>> inflation doesn't point to a need for stimulus, and automatic fiscal
>> stabilizers will provide more support than in other regions," the OECD=
>> added, noting that "in Japan, there is limited scope for responding to=
>> greater weakness."
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