Fed says that economy is slowing
Question: How can Obama blame Bush for a slowing economy that has started slowing 18 months after Obama took office?
Downgrading its assessment of the economy, the policy-making Federal Open Market Committee said the recovery "has slowed in recent months," and that the "pace of economic recovery is likely to be more modest in the near term than had been anticipated." The committee repeated its commitment to keep its target for the federal funds rate, at which banks lend to each other overnight, at "exceptionally low levels" for an "extended period." . . .
It looks like the second quarter's GDP numbers could be revised down from 2.4 percent to 1 percent.
June’s trade deficit swelled 18.8% to $49.9 billion, the highest since October 2008. That was much worse than Wall Street predicted — or what the Commerce Department estimated in the recent Q2 GDP report. The new report, along with recent inventory data, suggest Commerce will revise down Q2 economic growth from the already-sluggish 2.4% annual rate to about 1%, according to Action Economics. Action Economics is looking for stronger retail inventory figures later this week that would imply a 1.4% GDP pace.
Those downward revisions may bolster Q3 figures. Weaker inventory growth in Q2 suggests there will be less of a drop-off in Q3. Q2’s fat trade gap may mean the same.
But there’s no denying that the recovery is losing steam just as head winds hit. The inventory restocking cycle, which had fueled growth in recent quarters, clearly is ending. . . .