NewsMine — economy — united-states — 2006-sep-dec — Viewing Item

Stagflation and inflation at uncomfortable levels { September 28 2006 } Original Source Link: (May no longer be active)    http://www.washingtonpost.com/wp-dyn/content/article/2006/09/28/AR2006092800153.html http://www.washingtonpost.com/wp-dyn/content/article/2006/09/28/AR2006092800153.html Growth to slow while inflation high: forecast Reuters Thursday, September 28, 2006; 4:10 AM SAN FRANCISCO (Reuters) - A "whiff" of stagflation will linger about the U.S. economy through next year as growth slows and inflation holds at a level higher than the Federal Reserve would like, according to the latest UCLA Anderson Forecast report. The report by the forecasting group, released on Thursday, projects a sustained period of real growth for the U.S. economy of 1.5 percent to 2.0 percent with inflation above the Federal Reserve's "comfort level." "While not a recession, it is hardly a pretty picture. The combination of sluggish growth and rising prices will have the look and feel of a low level of stagflation," according to the report. "It's not the real thing of the 1970s," said David Shulman, the UCLA Anderson Forecast senior economist who wrote the report. "This is sort of a whiff." A rise in unemployment will add to the look and feel of stagflation, Shulman said. He expects the U.S. jobless rate to increase to 5.1 percent by the end of next year from 4.7 percent last month. At the same time, the core consumer price index will rise at an average rate of 3.2 percent, limiting options for the Federal Reserve, Shulman said. Shulman expects policy makers to cut the Federal Funds rate to 4.5 percent by mid-2007 from the current 5.25 percent. "We suspect that we have seen the last hike in the Fed Funds rate for a long time and in fact the next move will be to cut rates in early 2007," according to his report. Rate cuts and an improvement in trade, some easing in oil prices, a healthy pace of commercial construction activity that helps offset the housing slowdown and the homes market hitting a bottom will enable the economy to avoid recession and return to growth of 3 percent to 4 percent in 2008, he added. However, the housing market could upset that forecast, Shulman said, noting he is keeping a close watch on how the pace of housing starts slows. "If we're going to have a recession, its origins will be in the housing market," Shulman said. he state to 1990 levels, or by about 25 percent, by 2020. © 2006 Reuters

11 million americans hungry { October 2006 } Army may force goodyear workers to end strike Aug 2006 job numbers revised up { November 4 2006 } Contradictory employment numbers released { October 6 2006 } Dollar plunges to 15 year low { October 2006 } Dollar slides as US business slows { November 30 2006 } Economy in recession according to report { July 2006 } Ford buys out 75k jobs { August 2006 } Ford pays workers to quit { September 15 2006 } Gas prices down but core inflation up { September 2006 } Inflation highest jump in 30 years { November 2006 } Insider CEOs cashing stocks out { December 7 2006 } Labor debt revises job numbers suspiciously { October 7 2006 } Manufacturers cant find skilled american workers Manufacturing loses 39k jobs in august { November 4 2006 } Manufacturing shrinks for first time in 3 years { December 1 2006 } November ends with further dollar decline { October 2006 } Sharp slide in dollar during thanksgiving holiday { November 24 2006 } Stagflation and inflation at uncomfortable levels { September 28 2006 } Stocks tumble on fears of fed rate hikes { August 2006 } US trade deficit soars to record { November 2006 } Wholesale prices inflation surge in november { November 2006 } Files Listed: 22

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