Tags: global | economy

Fisher: No Economic Growth in 2009

By    |   Tuesday, 04 Nov 2008 09:48 AM

Federal Reserve Bank of Dallas President Richard Fisher said that credit conditions in the United States are very tight, and he expects no growth in the U.S. economy through the end of 2009.

Fisher also emphasized that despite the expected stagnant growth, the U.S. economy is not at risk of entering a potentially very damaging deflationary trend.

"I think we might see some negative numbers in terms of headline inflation for a couple of months. That does not mean we are in a sustained deflationary trend," Fisher told Bloomberg TV.

According to Fisher, the effectiveness of the Federal Reserve's latest 50 basis point rate cut to 1 percent has been diluted with the credit freeze.

"The credit crisis reached up and grabbed the throat of the global economy and choked off economic growth," said Fisher.

Fisher supported the Fed's rate cut decision last week as part of an effort to revive credit markets and stop a downturn in bank lending from setting off a global recession. In previous votes, he dissented five times because of his concern over high levels of inflation.

Fisher acknowledged that inflation during June and July were "very worrisome," and he added that price pressures "screeched to a halt" in September.

He also said that input costs had "enormous reversal." He predicted that companies will reduce capital spending and that U.S. exports will be weaker.

Top economists agree with Fisher's forecast for the U.S. economy. A survey of economists conducted by the National Association of Business Economists shows that the majority of them believe the economy has fallen into a recession that will continue throughout all of 2009.

Ninety percent of those surveyed indicated they were more pessimistic about the economy than they had been in July. Seventy-nine percent said the economy will grow less than 1 percent, and a third said the economy will shrink next year.

"Respondents to the October NABE Industry Survey were considerably more negative than they were in July, suggesting that the ongoing financial crisis is pulling down the overall economy," said Ken Simonson, a member of the NABE committee that conducted the survey.

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Federal Reserve Bank of Dallas President Richard Fisher said that credit conditions in the United States are very tight, and he expects no growth in the U.S. economy through the end of 2009.Fisher also emphasized that despite the expected stagnant growth, the U.S. economy...
global,economy
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2008-48-04
Tuesday, 04 Nov 2008 09:48 AM
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