Fed's View Too Rosy for Some Analysts

[papau]

http://story.news.yahoo.com/news?tmpl=story&ncid=1203&e=7&u=/nm/20040725/bs_nm/economy_fed_forecasts_dc&sid=95609869

Fed's View Too Rosy for Some Analysts

Sun Jul 25, 7:25 AM ET
By Victoria Thieberger

NEW YORK (Reuters) - The Federal Reserve s latest economic forecasts assume a perfect blend of growth and inflation, but analysts suspect the central bank is heading for disappointment on both counts. <snip>

If, instead, growth proves too cool and inflation too hot, the Fed might have to raise interest rates more quickly, even at the risk of slowing the economy.

In a semi-annual report to Congress this week, Fed Chairman Alan Greenspan (news - web sites) released the forecasts of the central bank's policy-setting committee, including a prediction that economic growth will reach a robust 4.5 percent to 4.75 percent this year.

That figure is well above the 4.0 percent consensus estimate of 30 economists surveyed by Reuters in a quarterly poll published earlier this weak.

The Fed's forecast implies that, with economic growth in the first half of the year running between 3.5 percent and 4.0 percent, gross domestic product would have to accelerate to a bit over 5.0 percent over the remainder of the year. <snip>

http://story.news.yahoo.com/news?tmpl=story&ncid=1203&e=8&u=/afp/20040725/bs_afp/us_economy_bank&sid=96001027


Doubts emerge over Greenspan's bright outlook

Sat Jul 24,11:17 PM ET

WASHINGTON, (AFP) - Fresh doubts are surfacing over the pace of US economic activity in the rest of 2004, likely to be a crucial factor for President George W. Bush's reelection bid.

Federal Reserve chairman Alan Greenspanlast week cast aside concerns that a string of soggy economic reports in June might linger, declaring a consumer-spending lull as "short-lived".

In June, employers hired 112,000 extra workers, fewer than half the number expected, retail sales fell by a seasonally adjusted 1.1 percent, and US industry cut output 0.3 percent.

The stock market, too, appears to be in the doldrums.

But Greenspan's prognosis in an address to a Senate banking panel on Tuesday cemented market expectations that interest rates were on the way up, probably at a moderate pace.

While most analysts agreed activity would accelerate, some said the central bank appeared to have taken a rose-tinted view of the economy at a time of tightening interest rates, high energy prices and terrorism risks. <snip>

[Name removed]

1. Deleted message

Message removed by moderator. Click here to review the message board rules.