Gross Domestic Product

February 29, 2008

George Bush says there will be no recession. “We’ll see the effects of this pro-growth package,” Bush told reporters at a White House news conference, acknowledging that some lawmakers already are talking about a second stimulus package. “Why don’t we let stimulus package 1, which seemed like a good idea at the time, have a chance to kick in?” Easy for you to say.

Everyone knows that the economy is sputtering. The stock market got off to one of the worst starts ever. And things have not improved that much since then. And today ends February gold is just under $1,000 an ounce. That’s not a good sign- for the economy.

The U.S. economy in the fourth quarter slowed less than previously projected as exports grew, economists said before revised government figures today. Growth advanced at an annual pace of 0.8 percent from October through December compared with the 0.6 percent estimated last month, according to the median forecast of 74 economists surveyed by Bloomberg News. The rate of expansion would still be the second weakest in five years. I’m not projecting a 6,000 Dow but neither is that impossible.

Ben Bernanke didn’t tell Congress this week exactly what the Federal Reserve would do next, but the central bank chief certainly left Wall Street with the impression that a half-point cut is a sure thing. The Federal Reserve policymakers are scheduled to meet again on March 18. Right now futures listed on the Chicago Board of Trade indicate that investors are pricing in a 100% chance of a half-point cut and a 32% chance that the Fed will slash interest rates by three-quarters of a percentage point.

We’ve come close to seeing a market melt down earlier in the year, but the market has been able to fend it off- somewhat. So, while we’re officially not in a recession, it sure feels like it unofficially.

Written by Ernie · Filed Under Daily Commentary