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Gulf News: US economy may be heading downhill

After years of talking about the Goldilocks economy not too hot and not too cold all of a sudden it appears the little rascal just got mugged by the three bears.

While the US economy began the year growing at a strong pace, activity seems to have hit the skids in the spring.

Factory orders fell in April. The five-year housing boom is cooling, with home sales falling and price gains slowing. In the biggest shocker of all, the government reported Friday that businesses created just 75,000 new jobs in May 100,000 fewer than expected.

If the onslaught of weaker economic data was not bad enough, there also are signs that long-dormant inflation may be starting to be a problem, and not just in the pain from $3 per gallon gasoline.

The relentless rise in crude oil to above $70 per barrel seems to be starting to trigger price problems outside of energy. The core rate of inflation, excluding food and energy, is now above the 2 per cent upper limit favoured by Federal Reserve Chairman Ben Bernanke and his colleagues.

by Fran on Tue Jun 6th, 2006 at 12:24:07 AM EST
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WaPo: Fed Chief Raises Inflation Concern

Federal Reserve Chairman Ben S. Bernanke expressed more concern about rising inflation than the cooling U.S. economy yesterday, sending his strongest signal yet that interest rates are probably headed higher.

Stocks plunged after Bernanke vowed to combat the recent "unwelcome" pickup in inflation, even as he told an international bankers' conference that an economic slowdown "seems now to be underway."



The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt št gmail dotcom) on Tue Jun 6th, 2006 at 02:59:06 AM EST
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"When night falls, will any of us see the dawn"

keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Tue Jun 6th, 2006 at 06:37:35 AM EST
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Given the average US consumer is in consumer debt up to his/her eyeballs with their major 'investment' being a house - they also haven't paid for - it will be interesting to see how they can avoid debt-peonage.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Wed Jun 7th, 2006 at 10:46:33 AM EST
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