Reply #8: U.S. Economy May Shrink 1.5% in 2009 as Recession Stymies Fed [View All]

[ozymandius]

Jan. 13 (Bloomberg) -- Economists slashed forecasts for U.S. growth in 2009 and projected Federal Reserve policy makers won’t be able to start raising interest rates until 2010, according to a monthly Bloomberg News survey.

The world’s largest economy will contract 1.5 percent this year, a half percentage point more than projected last month, according to the median of 59 forecasts in the survey taken from Jan. 5 to Jan. 12. The slump will push inflation below what some Fed officials consider price stability, the survey showed.

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Quarterly Forecasts

Gross domestic product dropped at a 5 percent annual pace in the last three months of 2008 and will contract 3 percent this quarter, with a 0.8 percent drop in the next three months, according to the survey median. All estimates were lower than in the previous monthly survey.

Obama’s spending and tax-cut package will result in GDP increasing 3.7 percent more by the end of 2010 than it would without the stimulus, according to a study compiled by his economic advisers. The two-year plan also will generate or save as many as 4 million jobs, according to the report.

http://www.bloomberg.com/apps/news?pid=20601068&sid=aTv0Xmo40wr8&refer=economy