NEW YORK – THE United States economy is in a recession, albeit a mild one, as a weakening consumer sector has compounded ongoing problems in the housing and credit markets, according to UBS economists.
‘It’s not coming. It’s here,’ UBS said in a research report on Wednesday.
The Federal Reserve on Wednesday sharply lowered its forecast for US economic growth for this year, but it is still expecting the economy to avoid a recession. Citing a deepening housing slump and tight credit, the Fed lowered its forecast to between 1.3 per cent and 2 per cent from a range of 1.8 per cent to 2.5 per cent it had projected in November last year.
UBS economists forecast US gross domestic product to fall 0.6 percentage point from the end of last year to the middle of this year.
The projected mild contraction will be led by the first decline in personal spending since the recession of 1991, UBS said.
Last month, the US government said the economy grew at an annual rate of 0.4 per cent in the fourth quarter of last year and expanded 2.2 per cent for the entire year, the weakest pace in five years.
Source: REUTERS (The Straits Times 22 Feb 08)