EconomicCrisis.US

Actually, the news from the AP’s survey of economists isn’t quite as pessimistic as JP Morgan’s long-term predictions earlier this month. The global financier’s projections showed a US growth rate for 2011 of just 1.5% and 1.3% in 2012, with unemployment increasing to 9.5%. AP’s survey predicts something closer to the mid-2s for the next two quarters and all of next year, with weak consumer spending being the main problem:

— The likelihood of a recession within the next 12 months is 26 percent. In June, the economists had put the likelihood at 15 percent.
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Businesses in the U.S. unexpectedly expanded at a faster pace in June and consumer confidence reached a 10-week high, signs that economic growth may pick up in the second half of the year.

The Institute for Supply Management-Chicago Inc.’s business barometer climbed to 61.1, exceeding the highest forecast in a Bloomberg News survey, from 56.6 in May. Readings greater than 50 signal expansion. The Bloomberg Consumer Comfort Index rose to minus 43.9 from minus 44.9.

Stocks climbed for a fourth day as the Chicago group’s figures indicated manufacturing is rebounding after a lull brought on by parts shortages tied to the March earthquake in Japan. The data underscore the view of Federal Reserve policy makers that the first-half slowdown will prove “temporary,” as fuel prices become less of a burden for companies and consumers.
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The Federal Reserve will likely acknowledge renewed weakness in the U.S. economy in a post-meeting policy statement on Wednesday, but don’t expect policymakers to do anything about it any time soon.

That’s in part because underlying inflation trends, considered too low in the period preceding the launch of the central bank’s most recent round of bond purchases, have been rising.

Moreover, the central bank faced intense criticism as its second round of quantitative easing — a $600 billion bond purchase program known as QE2 — sparked accusations that policymakers were sowing the seeds for future inflation.
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The Federal Reserve is set to soon publish proposed tighter rules for big financial firms that pose a risk to the economy, Fed Chairman Ben Bernanke will tell a Senate panel on Thursday.

As part of the financial law approved by Congress almost a year ago, the Fed is working on more stringent rules for large banks and financial companies, including “enhanced” standards on capital and leverage requirements, Bernanke is slated to tell U.S. senators. A package of proposed rules is set to be released this summer ahead of a Jan. 2012 implementation deadline.
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