Posted on 09/08/2006 10:57:03 AM PDT by Hydroshock
NEW YORK (Reuters) - Investment bank HSBC has revised downward its forecast for 2007 economic growth and cautioned that the risk of an outright recession is growing as a retreat in housing threatens household balance sheets.
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The company argues that while corporate profits have remained sky-high, the incomes of most Americans have effectively fallen over the last 18 months.
That, say economists Stephen King and Ian Morris, could be a recipe for hard times in an economy that relies on consumers for over two-thirds of its strength.
"Never before have households been so hard hit at a time companies are doing so well," the two economists said in a research note to clients. "So it's likely that the U.S. could slow down quite a long way."
They now see gross domestic product expanding just 1.9 percent next year, down from an earlier forecast of 2.6 percent and from an expected rate of growth around 3.5 percent for 2006.
Making things worse, the bank says, a mammoth budget deficit means the U.S. government has "less room to maneuver" if the economy does skid off track.
In the last recession, a massive round of tax cuts and a super-loose monetary policy helped the economy get a second wind. Americans will have no such luck this time around, King and Morris warn.
LOWER RATES! YOU OVER SHOT AGAIN FED !
Free your inner WillieGreen.
This article is a farce.
Hong Kong and Shanghai Bank want the Democrats to win. I wonder why?
This is probably factually correct. Just like, if I have two pennies, and lose one, I have lost 50% of my money.
Pure BS. When have the so called Economic expert been right as of late? Shouldn't we be filling up our tanks right now with $3 to $4 per gallon gas from $100 per barrel oil? The price of oil is dropping by the dollar daily and the price for a gallon of gas is dropping by the day down here.
Dunno, lately there is a trend of the Fed holding over the Economy until a new President is elected and then they dump in his lap.
They did it to Bush, and they will do it to the next President as well.
I see you love talking down the economy just like a good little democrat. You make willy green look like an optimist, except you don't talk about high speed rail much.
In my area, house prices have not driopped one bit. I wish like hell they would, I'm planniing on buying soon.
I am in the construction industry. We are flat out busy. The State of Connecticut can't get people to bid work because they are all way tooo busy. We can't get enough help because they all have good jobs already. We have to bring in rental equipment from Ohio because there is none available in New England. It's all out working.
We have 80% of next years workload already filled.
Recession, my A$$!
For the record, on October 31, 2001, CNN's Brooke Jackson reported:
“Three days before Christmas 1992, the National Bureau of Economic Research finally issued its official proclamation that the recession had ended 21 months earlier. What became the longest boom in U.S. history actually began nearly two years before Clinton took office.”
Why? Would gain could HSBC possibly see in talking down the US economy?
We're DOOOOMMMMED!!! BUSH'S FAULT! /moonbat
Reuters despises the United States and President Bush.
The article is written with a lead from a somewhat mainstream data point. The Reuters then seeks out sources to confirm their notions of subverting the US economy. There is not indication after the first two paragraphs that HSBC is the source of the info-- yet Reuters tries to create this impression.
Who are these "economists"?
They are partisan hacks in my estimation.
Yep, the risks of a recession grow every single day the expansion continues.
Even the Clintons couldn't repeal the business cycle.
Maybe because they are sponsoring many of their election bids?
""Why? Would gain could HSBC possibly see in talking down the US economy?"
You cant talk the economy up or down. I would love to know what recession was started by "talk"
Hong Kong and Shanghai Bank want the Democrats to win. I wonder why?
They want change. They're holding a huge amount of U.S. paper...they can't dump the paper and they don't want to buy more.
Must be election season...
a recession in 2007 guarantees Hillary will be elected
Rather than a sudden wallop, the economic impact would be gradual and grinding. Ian Morris, U.S. economist at HSBC Securities Inc. (HBC ), estimates that housing prices nationally will slide 5% to 10% over the next five years. That could cause economic growth to slow to 2% by the second half of 2005 from 4% now, he predicts in a report called The U.S. Housing Bubble.
I am not buying their latest economic outlook either.
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